Leopold Center - Ecolabel Value Assessment: Executive Summary

An ecolabel is a seal or logo indicating that a product has met a certain set of environmental and/or social standards or attributes. Ecolabels offer one important avenue to educate consumers about locally grown, sustainably-raised foods.

The Leopold Center for Sustainable Agriculture partnered with the Iowa State University Business Analysis Laboratory in the second phase of a pilot project to conduct consumer market research on food ecolabels and perceptions of locally grown foods. The specific objectives for Phase II were as follows:

An Internet-based survey was designed and conducted in November 2003 with consumers in the states of Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, and Wisconsin. Based on Phase I findings, four new ecolabels were created for study in Phase II. (A complete copy of the Phase I report is available at the Leopold Center's web site, www.leopold.iastate.edu/pubs/staff/ecolabels/index.htm). Strawberries were selected as the food item for use in all the ecolabels. The first set of labels were designed with two tag lines (both with freshness messages) and a background picture to reinforce an appealing image of fresh strawberries. The second set of Phase II ecolabels used a single tag line (with a freshness message) without a background picture and compared locally grown strawberries with berries grown within the United States. Respondents were asked to respond to a series of questions regarding the ecolabels, as well as questions concerning their perceptions of locally grown foods.

A second Internet-based survey was designed and administered to a group of respondents in Iowa, the Omaha, Nebraska metropolitan area, and the Quad Cities metropolitan area (Illinois and Iowa). This survey focused on respondents' interest in learning more about how and where their food is produced, and their willingness to pay for foods produced in a way to improve the environment, community life, and livelihood of local farms.

More than 70 percent of respondents viewing the set of simplified ecolabels with one tagline, which compared locally grown strawberries with those grown in the United States, thought of reasons why they would buy locally grown berries. More than 90 percent of this group preferred the locally grown label with the single tag line rather than the USA-grown strawberry label. By creating an image that equated grown locally with freshness, this set of ecolabels stimulated the desire of respondents to purchase local strawberries. It also provided them a clear choice between locally grown strawberries and USA-grown but generic berries.

Consumer respondents have a basic understanding that local sources-whether local means grown several miles away in the same county or within one's state of residence-are responsible for a minority of the fresh meat and produce available for sale. Their interest in locally grown foods is intertwined with their wish to have more of these products readily available.

If price and visual appearance were the same and the package label for meat or produce items provided limited information as to how and where the product was grown, consumer respondents were much more likely to make locally grown, or locally grown without pesticides (pesticide-free) their first choice over certified organic choices, even if those choices were locally grown. These findings imply that the term locally grown commands a great deal of power and influence for consumers when purchasing meat or produce items. It also implies that consumers either do not fully understand the term organic, and/or do not perceive that the same sense of value applies to organic meat and produce items as to locally grown products.

If price and visual appearance were the same and respondents knew that the attribute information for the product was true, they were most likely to choose a locally grown and pesticide-free meat or produce item compared to certified organic options, including locally grown-organic. The option "grown locally-some pesticides used" received more than twice as many first choice selections than "certified organic-origin unknown.' This finding supports a common perception held by local food advocates that, given a choice, consumers are more likely to purchase locally grown over organic foods produced in a distant region, even if the local foods were produced using some pesticides.

When asked how closely the terms grown locally, pesticide-free, organic, grown in your state, product of USA, and humanely raised were related to the term "family farm," the majority of respondents believed that grown locally was the most closely related term (68 percent for those who viewed ecolabels and 60 percent for those who did not). None of the other terms were viewed by more than 10 percent of respondents as being most closely related to the term family farm.

Consumer respondents (who viewed ecolabels and those that did not) were asked to rate a suite of options as to their potential to financially assist farmers within their state. Respondents were most likely to rate selling more food items to local and regional markets and having more in-state processing options (meat, poultry, produce) as having the highest income potential, compared to other options such as agri-tourism, farming more acres the same way, forming a marketing cooperative, and organic production. Study findings clearly reflect consumer respondent's interest in local foods; which may be why respondents rated selling more food items to local and regional markets and having more in-state processing as the options most likely to financially assist farmers. If these options were successful, consumer respondents would have more local and regional food choices to access, while the other options may not necessarily impact availability of local foods. More than three-fourths of the respondents do not perceive that farming more acres in the same manner offers high potential for financial gains for farmers.

In marketing terms, the freshness, quality, taste, and price of the food product (in our ecolabel case, strawberries) are part of the core product to consumers. These four characteristics drive consumer respondents' overall purchasing decisions. Respondents secondarily look for augmented food product benefits such as buying locally (supporting local farmers), promoting good health, protecting the environment, and supporting the local economy (in their community or state). Foods that are locally grown hold great appeal for consumer respondents provided those products consistently offer the taste, freshness, quality, and value consumers are looking for. Survey results confirm Phase I findings that the majority of consumer respondents do not have concerns with locally grown foods. Consumer respondents also are more interested in locally grown foods than they are foods that are produced in an environmentally sound manner (but not identified as local).

The most influential tag line (for purchase of local foods) among the five options offered to respondents was "Freshness-dated, so you know when it left the farm"-regardless of whether respondents viewed ecolabels or not. The responses to the tag lines support the premise first advanced in the Phase I study that the use of freshness dating on locally grown products is a concept with tremendous market potential. It appeals to consumer desires to understand the level of freshness of the food they buy. It also supports other U.S. food science research that shows consumer perception of freshness is determined in part by the time from harvest to sale. However, freshness dating should be extended beyond stating how long a product will retain quality to include how fresh (time from harvest) the product is when it arrives at the store or point of sale.

The concept of using freshness dating of food products (particularly produce, and in some cases, eggs, dairy, and meat) should be explored to enhance local farmers' competitive advantage over non-local products. Tag lines such as "from farm to your store's door in 24 hours" or "within an hour's drive from your store" evoke perceptions of local and fresh products that are easily accessible from nearby farms and offer a competitive advantage to farmers interested in local and regional markets.

This research has shown that consumer respondents in the upper Midwest are greatly influenced by market messages that equate locally grown products with freshness. Campaigns such as "Buy Fresh, Buy Local" initiated by the Food Routes Network (www.foodroutes.org) and other "buy local" efforts have discovered the advantages of this connection and place their message equating freshness with local origins-front and center-in all of their marketing materials.

Phase II: Iowa-based Willingness to Pay Survey

Nearly 30 percent of respondents in Iowa (and adjacent metropolitan areas in Nebraska and Illinois) indicated that they think frequently about where and how their food is produced. Respondents clearly were interested in locally grown foods, with more than 50 percent indicating high to very high levels of interest. On a relative basis, the respondents were more interested in local foods than food raised in an environmentally and socially responsible manner. This information supports findings from the larger Phase II ecolabel and no ecolabel study that shows consumer respondents have more of an interest in locally grown foods than they do foods that have environmental and social attributes but which are not produced locally.

Twelve to 18 percent of consumer respondents were willing to pay 30 percent or more for food products (depending on the food item) that combine the attributes of locally grown with environmental and community stewardship. Since this group of respondents was more interested in local food than food grown in an environmentally and socially responsible manner, it is likely that the locally grown attribute is a more important factor in the willingness to pay above conventional price than the two other factors (food grown in an environmentally and socially responsible manner). This information on willingness to pay is encouraging news to small and midsize farmers who are looking to grow and market their products using the attribute of locally grown to differentiate themselves. It is clear, however, that these consumer respondents want the farms where these foods are produced to be inspected and certified for the claims they are making, particularly if they are buying these products from food stores.