An analysis of the territorial factors affecting milk purchase in Italy

Abstract

Numerous international studies have pointed out that consumers are usually willing to pay a premium price for domestic and local food. This paper describes the use of a choice experiment to investigate the willingness to pay (WTP) a premium price for milk while considering three attributes: origin (south Italy, north-centre Italy, or other European Union countries), area of production (mountain or plains), and rearing method (cows grazed or kept in a barn). The data collected were analysed by means of three approaches. First, we used a multinomial logit model to estimate the average premium price for the three attributes considered. Second, an interaction term between price and quantity of milk purchased weekly was introduced into the model. This made it possible to verify whether the quantity purchased can modify the WTP, and the magnitude and significance of the effect. Finally, the latent class method was used to explore the heterogeneity of the preferences. The results suggest that the choice experiment, despite providing important qualitative measures, should be utilised with caution regarding premium price estimates in the analysis of food demand.