Consumer Willingness to Pay for Locally Produced Dairy in Southwest Missouri

The study examines the demand for locally produced dairy products in Southwest Missouri. It is expected that consumers will be willing to pay a premium price for dairy products that are differentiated as locally produced. The data for the study were collected through interception of grocery shoppers. Additional data were collected through a survey of grocery retailers. Descriptive statistics were calculated using SPSS (Statistical Package for the Social Sciences). A two stage regression model was estimated to explore factors affecting willingness to pay a premium price for locally produced dairy. The study results show that dairy farmers are able to differentiate their products as locally produced; they can capture a larger share of the consumers\u27 budget. Consumers that value attributes such as farm fresh, locally produced, and hormone free are more likely to pay a premium for locally produced dairy. Those consumers are likely to pay 10% or more for locally produced dairy than for traditional dairy products