Desmond R. Layne

U.S. Peach Producer Preference and Willingness to Pay for Fruit Attributes

This study investigates U.S. peach producers’ willingness to pay (WTP) for potential improvement of peach fruit attributes. Data were collected from 124 U.S. peach producers. The choice experiment and socioeconomic data were analyzed using mixed logit (ML) models to estimate the producer WTP and preferences for peach attributes. The results indicate that the WTP for attribute values vary across peach producers from different production regions (California and eastern United States), with different selling targets (fresh and processed) and different orchard sizes (smaller or larger than 15 acres). These results provide useful information for peach breeders in prioritizing traits in their breeding programs. Peach [Prunus persica (L.) Batsch] is an important crop for both fresh and processed markets in worldwide. It is increasingly challenging for peach producers to select the ideal scion cultivar that satisfies market requirements and maximizes their profits, especially considering the high capital investment for establishment and time lag to generating a positive cash flow (Day et al., 2009; Yue et al., 2014). Total farm gate value of U.S. peach production was

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606 million in 2015 and used production was 825,415 tons, including 467,680 tons for processing (USDA NASS, 2016). Although commercial production is distributed across 23 states, California is the largest producer, accounting for 73% of total U.S. production in 2015. Forty-eight percent of fresh peaches and 96% of processed peaches were produced in California, with South Carolina, Georgia, and New Jersey the second, third, and fourth top production states, respectively. Total peach production in 2015 dropped by 13% from 978,260 tons in 2012 (USDA NASS, 2013). Meanwhile, the average price of fresh peach in 2015 increased by 12% to

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734/ton compared with

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654/ton in 2012 (USDA NASS, 2016). In the processed peach market, the average price also increased by 40% from

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323/ton in 2012 to

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451/ton in 2015 (USDA NASS, 2013, 2016). The two most common types of peach cultivars are the nonmelting clingstone and the melting freestone. The flesh of nonmelting clingstone ‘‘clings’’ to the pit or stone and therefore makes them difficult to separate. The nonmelting clingstone peaches have firm flesh texture when ripe and are typically used for canning (Gradziel and McCaa, 2008). In contrast, the fruit flesh of melting freestone peaches is easily separated from the pit and becomes increasingly soft and juicy during ripening (Okie et al., 2008). Nonmelting clingstone cultivars have been bred specifically for the processed market and are not typically for fresh consumption, whereas melting freestone cultivars have been bred specifically for the fresh market. However, when peaches are over supplied in the market, some melting freestone peaches may be processed by canning or freezing. Different peach-growing regions differ significantly in production conditions, transportation, and marketing channels. Cultivars that were originally bred in California are highly susceptible to bacterial spot disease (Xanthomonas arboricola pv. pruni), a very serious disease in the wet and humid climate of the eastern United States (Ritchie et al., 2008), and can require weekly sprays of antibiotics to produce blemish-free fruit (Horton et al., 2003). California fresh market producers tend to have larger size operations compared with other peach-producing regions and primarily supply their fruit through commercial chain stores across the United States. Therefore, peaches from California need to be harvested before reaching full physiological maturity to permit the longdistance transportation. Fruit from the eastern United States are mostly harvested closer to maturity, especially for smaller-sized operations, which usually sell their peach to local grocery stores, farmers’ markets, and roadside markets (Hardesty and Leff, 2010). Peach producers must select the scion cultivar best suited to their specific environmental conditions and marketing channels (Fuglie and Walker, 2001). The choice of cultivars is a decision with high stakes for peach producers, given fluctuating market demands and the significant time lag to generate positive cash flow (Day et al., 2009). Choosing the cultivar with superior horticultural performance and market acceptance provides advantages to producers; other parties in the supply chain such as packers, shippers, and retailers; and ultimately, consumers. Dandekar and Iezzoni (2012) emphasized that new cultivars of rosaceous fruits play a vital role to improve fruit quality, increase producer production and consumer consumption, increase fruit competitiveness, and enhance the profit of every stakeholder (i.e., producers, processors, shippers, packers, retailers, and brokers) along the supply chain. Significant financial inputs and labor resources are generally required to develop and commercialize new cultivars. Breeders typically have a sense of the importance of certain fruit traits based on their informal contacts with stakeholders, but the marginal values of these traits are unknown (Gallardo et al., 2012). For example, a common perception among peach breeders is that external fruit color is critical for a new fresh peach cultivar, but the marginal value for the improvement of external color from not 116 HORTSCIENCE VOL. 52(1) JANUARY 2017 desirable (lack of skin blush/color) to desirable (cream/yellow background color with a red blush) remains unknown. Nonetheless, it is producers who take the risk of investing in growing a cultivar they hope will have consumer acceptance throughout the supply chain. Since producers are the direct clientele of breeding programs, their perceptions and valuations of fruit attributes provide essential information in setting peach breeding targets. Combining this input with that from other parties in the supply chain, breeders could significantly improve efficiency of their programs and the commercial success of their releases (Yue et al., 2012). Most relevant empirical research has focused on consumer preference analysis for peach fruit attributes. Jordan et al. (1986) and Parker et al. (1991) indicated that U.S. fresh peach prices are positively correlated with fruit attributes, including freedom from defects, color, maturity, and size. Ravaglia et al. (1966) found that a high level of soluble solids content (SSC) is also important for consumer acceptance. Hilaire (2003) further established that a minimum of 10% SSC is needed for peaches with low titratable acidity and 11% SSC for peaches with high titratable acidity, to achieve consumers’ overall acceptability. Crisosto (2005) concluded that the ratio of SSC and titratable acidity levels for desirable fruit varies across peach cultivars, whereas Predieri et al. (2006) found that titratable acidity, astringency, and sweetness were positively correlated with overall appreciation of ‘Royal Gem’ (yellow peach) and ‘Silver Rome’ (white peach). Consumers’ preferences for fruit attributes have significant impacts on producers’ adoption of peach scion cultivars, but the attributes preferred by consumers may not generate the maximum profit for producers. For growers, cultivars with different attributes have different yield rates, and need different levels of inputs (labor, fertilizers, pesticides, etc.) and thus different production/storage/handling costs. These factors would affect growers’ willingness to invest in new cultivars with improved attributes. Furthermore, while most businesses such as food retailers and processors would be interested in evaluating consumer preferences for a new product or attribute, agribusinesses such as seed and chemical companies, technology, and equipment dealers, and agricultural service providers might be interested in assessing producerWTP for a new cultivar (Lusk and Hudson, 2004). In contrast to the literature investigating consumers’ preferences and WTP for peach attributes, very few studies have focused on peach producers’ preferences for peach attributes. Yue et al. (2014) conducted audience surveys at grower meetings to investigate peach growers’ perception of the relative importance of peach attributes finding that fresh peach growers in the eastern United States consider fruit flavor and fruit size as the most important traits, whereas processed peach growers in California regard size, absence of spit pits, and firmness as the most important traits. Although Yue et al. (2014) estimated peach producers’ relative importance of the plant and fruit quality traits based on ranking attributes, this study elicited growers’ WTP for fruit traits using choice experiments. In importance ranking questions, participants often do not consider the cost associated with their preferred attributes, which could affect the ranking. Choice experiments are designed to overcome this issue through the inclusion of costs in the choice sets. As a result, information is obtained for both the relative importance of the fruit traits and the producers’ WTP values for trait improvement. Further, the study conducted by Yue et al. (2014) was based on a state or regional sample at grower meetings. In contrast, this study is based on a random sample of growers from the top five producing states across the United States. To our knowledge, after Park and Florkowski (2003) studied the relative importance of peach attributes for Georgia producers over a decade ago, no other study has focused on peach producers’ WTP for fruit attribute improvement, and we aim to fill this knowledge gap. Specifically, in this study, we investigate producers’ WTP for peach fruit attributes and explore the potential producer segments by region, farm size, and use of final products (fresh vs. processed). The information can help peach breeders prioritize fruit traits in their breeding programs to increase their efficiency and the commercial success of their releases. Survey Design and Data Survey data wer