CONSUMERS have a strong stated preference for a local label attribute in WA and are willing to pay a premium for it.
That was the key message from Emma Downsborough at the WA Young Professionals in Agriculture Forum last week.
Ms Downsborough completed a Bachelor of Science (Agriculture) with first class honours and Bachelor of Commerce (Marketing, Entrepreneurship and Business Law) in 2012, and was named the overall winner of WA Young Professionals in Agriculture Award.
The award, established by the Ag Institute of Australia and sponsored by the Department of Agriculture and Food, saw Ms Downsborough successfully compete with other young scientists from a number of tertiary institutions throughout WA.
"How many of you would prefer to support local producers when you are buying your food?" Ms Downsborough asked.
"I'm guessing that most of you would say yes."
For her final year thesis project, Ms Downsborough set out to determine consumer willingness to pay for a local label attribute in WA fresh and processed-in-WA food products.
She said local produce was known to be fresher, healthier, with a higher food safety level throughout the supply chain, while supporting local farmers and the local economy.
The thesis project set out to establish if people were willing to pay a higher price for local produce and if so how much.
Ms Downsborough said there had been little research done into the consumer preferences for and a willingness to pay for local goods.
And there was limited research into the effects of local branding campaigns and how that could drive demand.
"It has particular relevance given that our current State brand is partially government funded," she said.
In her study, Ms Downsborough aimed to explore demographic factors and attitudes toward local food and local food initiatives in WA, with a hope to better assess the effectiveness of the State Government's Buy West Eat Best branding campaign.
She said such research could provide information to the WA food industry that would help better allocate taxpayer funds.
Ms Downsborough said the research was motivated by the need for producers to be able to better market their foods to enable them to be able to compete with imported produce.
The study was centred around the WA Buy West Eat Best labelling initiative which was launched in 2007 to promote locally-grown and processed foods.
Ms Downsborough said the campaign had a full supply chain focus and was synonymous with quality, which was why it formed the basis for her hypothesis testing.
The study began with qualitative preference questionnaires which explored why people bought local and if there was a preference for local foods, this was consolidated with choice sets and demographic questions.
Ms Downsborough tested skinless chicken breast as a fresh product and fruit yoghurt as a processed product.
Each respondent was randomly assigned to one of two choice set questions and each of the choice sets had a set of six yoghurt questions and six chicken questions.
The study exposed respondents to prices that varied from the normal pricing that they would usually pay in the supermarket.
A quality measure was put in place which included a free-range classification in chicken and fruit content in yoghurt.
The Buy West Eat Best label and size of producer were also taken into account.
A total of 333 survey responses were collected in the two week period after the promotion of the survey using a mix of in-store handouts, mailbox drops and social media.
Ms Downsborough said qualitative results indicated that WA consumers had a high stated preference for local food with 80pc of people indicating they would prefer to buy local, but found that only 20pc of consumers looked to the Buy West Eat Best logo.
More than five different labels denote local produce in WA and Ms Downsborough said this may indicate some brand confusion.
The study revealed that brand recognition for the Buy West Eat Best campaign was high with 75pc respondents recognising it when they shop.
She said that despite a high stated preference people didn't seem to be use the Buy West Eat Best logo as a tool to guide their purchase decisions.
There was a strong preference for local foods and Ms Downsborough then aimed to quantify this in her study.
The study employed choice modelling which used the basic theory that people will base their product choice on a bundle of attributes that gives them the greatest benefit or will allow a consumer to benefit from that set of attributes.
The study involved a gender variable, whether the person lived in city or country, local preference variable and when they were born in Australia or overseas.
Ms Downsborough found increased price had a negative impact on the benefit - as price went up benefit gain decreased.
Buy West Eat Best had a big increase in utility for consumers and more prevalent for people who wanted to buy local and also those living in the country.
She said the free-range attribute also increased utility, particularly for females, and moreso for country people than city.
Ms Downsborough found people also preferred to buy from a small family firm and people born outside Australia still found utility in Buy West Eat Best logo, but to a lesser extent to those born in Australia.
The study indicated that willingness to pay for the Buy West Eat Best logo was high for all respondents and only varied slightly depending on a person's situation.
Willingness to pay for other variables was also calculated such as the free-range aspect of the chicken and fruit content in yoghurt and found quality measures increased willingness to pay.
"Consumers have a strong stated preference for local foods and although people recognise the Buy West Eat Best logo they're not using it at the moment to guide their product food choices," Ms Downsborough said.
"Consumers are willing to pay a significant premium for a local label attribute in both fresh and processed product in WA.
"They are also willing to pay for a quality attribute and they're prepared to pay for a smaller firm over a larger firm."
She said these findings were significant as a premium was found to exist that farmers should be aiming to capture in the local food market.
"They just need to create a credible brand image that will allow them to do so,"she said.
"Consumers are willing to pay that premium for local product and producers just need to be able to market it correctly to be able to capture it."