"Despite economic hardships and shrinking overall turkey production in the U.S., the allure of a fresh, organic turkey has grown in recent years. Farmers and industry experts attribute the increasing demand, particularly in California, to the health-conscious culture, the popularity of the anti-agribusiness sentiment found in the documentary "Food Inc." and the movement for locally grown food. Or maybe it's just simple nostalgia for a classic holiday feast." (LA Times)
How much of a price premium must one pay for the organic turkey?
"The price of a frozen turkey at an Albertson's or Ralphs market usually tops out around $1.99 a pound (and some chains offer holiday turkey discounts to get customers in the store and spending on other things.) The price per pound of a fresh turkey can hit $5 or more but generally ranges from $1.99 to $2.69 — a noticeable price difference over frozen birds, especially when multiplied by 15 or 20 pounds."
What merits this price premium?
"Pitman said that organic turkeys must be raised on certified organic ranches and given organic feed, free of genetically modified organisms and pesticides. That also means no hormone injections, something her farm prides itself on. "You get just turkey, just chicken, just duck. We have nothing added, no injections, nothing," Pitman said."
This is an interesting case of product differentiation --- I don't think I can tell what are the consequences for my family if we eat the "steroid turkey" vs. this expensive hippie turkey. The interesting economics question is; "during a recession, are people more price sensitive and thus less willing to pay the price premium for the organic turkey?" During a recession, what consumer products do we cut back on? Vacations? New cars? new furniture? Or within food categories, do we eat out less and eat cheaper foods?
There are many quality margins to move on that will allow your household to reduce its total expenditures --- it would interest me whether our consumption data is good enough to detect these substitution patterns over the business cycle for different types of households.
Now, all of this blog post has focused on the demand side --- on the supply side -- - I have no idea how much it costs a farmer to grow a 20 pound turkey if they don't use the steroids and and other "hormone injections".
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. This post originally ran on greeneconomics.blogspot.com.