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THE INTERDEPENDENCE OF THE PURCHASING POWER OF TOURISTS AND THEIR PREFERENCES FOR ORGANIC FOOD, IN THE CASE OF ISTRIA

Ana Teak Institute of Agriculture and Tourism Pore, Croatia e-mail: tezak@iptpo.hr Desimir Bokovi Institute of Agriculture and Tourism Pore, Croatia e-mail: desimir@iptpo.hr and Darko Safti Institute of Agriculture and Tourism Pore, Croatia e-mail: darkos@iptpo.hr

ABSTRACT With the heightening of environmental awareness and the expanding concern for health, there is a growing demand for organic food. To reinforce the competitive advantages of the Istria tourist destination and to launch an initiative for organic farming, a survey was conducted with the aim of quantifying the interest of tourists in organic food. This paper demonstrates the existence of a correlation between the tourists purchasing power and their interest in buying/consuming organic food during their stay in Istria, willingness to pay higher prices for organic food, awareness of organic food selling price, and interest in vacationing in rural Istria. Key Words: organic food, survey, purchasing power, preferences, demand, 2 test INTRODUCTION Gastronomy is a vital element of any destinations offering. As tourists are becoming increasingly interested in consuming the food typical of the region they are visiting, and are becomin more and more environmentally aware, there is a growing demand for making the organic food offering a part of a destinations gastronomic offering. Organic food is enjoying an upward trend on the markets of advanced countries. In recent years, these markets have shown a great interest in such products. The consumption of organic food and beverages is concentrated in Europe and the United States, but the production of certified organic products is scattered worldwide (Greene 2008:26). According to the data of the Institute of Organic Agriculture gathered in 2002 (Greene: 2008), more than 77 million acres of agricultural land were being managed organically by farms in 119 countries during 2005 and 2006, with Australia in the lead; China, in second place; and Argentina, in third place. Of the European countries, Italy, Germany, Spain, France, Austria, Greece, the Ukraine, and the Czech Republic are, in particular, engaged in organic farming. Organic agriculture, in its present state, does not allow for the mass production of organic food, and this is one of the reasons for the higher prices of organic products in comparison to conventionally produced agricultural products. This means that organic food is not available to a broader circle of consumers. As environmental awareness grows, so does the interest of residents and tourists, alike. The outcome is the growing number of organic farmers every year. The term organic farming refers to the manner in which food is produced, on the one hand, and to the particular quality of a product as a result of natural conditions of growth, organic impetus through the action of micro organisms, and the way the product is processed, on the other hand (Cifri, 2003:10). The Act on the Organic Production of Agricultural and Food Products defines ecological production (organic, biological) as a particular system of sustainable management in agricultural and forestry that involves plant growing, animal raising, the production of food, raw materials and natural fibers, and the processing of primary products, and includes all ecologically, economically and socially justified production and technological methods,

interventions and systems, that make the best use of the fertility of soils, the availability of water, the natural properties of plants, animals and landscapes, and that help to increase the yields and resistance of plants by using natural forces and laws and applying fertilisers and plant and animal protection chemicals as prescribed by and in compliance to internationally adopted standards and principles (Official Gazette 12/01). Alongside the industries and transportation, conventional agricultural production is a major polluter. Pollution occurs during the production and intensive use of mineral fertilisers, pesticides, veterinary preparations and hormones, when using machinery, etc. The adverse effects that conventional agriculture has on the environment and the health of people are: reduction of humus, loss of soil fertility; increased erosion; contamination of the environment with pesticides, pesticide derivates and heavy metals; contamination of underground and other water with nitrates and phosphates; genetic erosion; excessive production; economic inefficiency, etc. In addition to being a direct environmental polluter, conventional agriculture is also the cause of other ecological degradation, such as the decline of biodiversity and the loss of plant and animal species, the salinisation of soils, the eutrophication of waters, desiccation, etc. Todays conventional agricultural production has a negative energy balance or, simply said, it consumes more energy for production that it gives back in the form of its products (Znaor, 1996: 24-30; from Tolui, 1996: 49). Also, the social costs of such production are not negligible. Such costs relate to the storage costs of product surpluses, the costs of water treatment, increased health-care costs, etc. and are all shifted onto the community (Znaor, 1996: 38; from Tolui, 1996: 50). There is much scientific evidence confirming that foodstuffs and nourishment produced by methods of eco-production are of a higher quality and healthier than those produced by conventional agriculture. On the demand side, the recent growth in consumption of organic food may be due to an increasing focus on the private attributes of goods, such as health, taste and quality. However, if demand for organic food is driven by public attributes of goods, such as improved environmental and animal welfare, the structure of the modern organic market may represent a paradox. Organic farming has been traditionally viewed as representing a critical stance towards increasingly industrialised conventional farming (Morgan and Murdoch, 2000). Earlier research has shown that organic farmers differ considerably from conventional farmers with regard to their attitudes towards environmental and animal welfare issues (Storstad and Bjrkhaug, 2003). Organic products have been frequently associated with attributes such as traceability, local origin and supply, small-scale units of production, adequate information through the chain from producer to consumer, all characteristics commonly associated with food that are perceived as being safe and trustworthy. Major problems to developing organic agriculture in Istria are: the fragmentation of farmland that took place from the middle of the nineteenth to the middle of the twentieth century (Kuen, 2003); the considerable differences in yields in comparison to conventional farming of particular crops; a narrow range of possible protection chemicals to use, and the fact that producers are poorly informed about the possible ways of protecting crops. A development strategy for organic agriculture has yet to become functional. The production of organic products in Croatia, Istria included, is still in its infancy and, accordingly, so is the market of organic products. Up to date in Croatia, many papers have been published in the field of organic production, and are, for example, concerned with the interdependence of organic production and tourism (Kuen, 2002), organic farming as a means of enriching the tourism offering (Ban et al., 2004), the marketing mix for organic food in Eastern Croatia (Tolui et al., 2002), the ways in which the experiences of farmers can be transferred to organic farming (Cifri, 2003). METHODOLOGY AND DATA SOURCES A survey conducted in July and August 2007 has demonstrated that tourists are interested in consuming organic food during their stay in Istria. The survey data has served as a starting point for a study entitled Market Opportunities for Developing Organic Agriculture in the Istria County. The study was divided into two phases. The first phase identified the specific features relating to organic farming and organic food by using secondary data. These served in compiling a questionnaire that was used in the studys second phase. In the survey, a total of 1,300 questionnaires were collected from tourists visiting Istria in August and September 2008. Sample selection was carried out in several phases. Because the first phase of the study established that organic food products are, in principle, more expensive than conventionally produced food, the tourists selected for the survey were those staying in high-category facilities, that is, primarily in hotels with at least four stars. The assumption was that these tourists have the purchasing power required for buying organic food products. Four-star hotels in Istria were identified and visited on dates previously agreed upon with the hotels managements. The convenient sample was selected for the survey. Respondent patterns were identified using the data obtained from the hoteliers regarding the structure and number of guests in a given facility.

The tourists were asked to fill out a questionnaire containing 16 questions divided into a number of groups. The first group of questions was related to demography: country of origin, age, sex, profession, and income. The second group of questions involved questions relating to the purchasing of organic food by tourists in their home country. These questions were aimed at understanding: the satisfaction of tourists with foodstuffs that they buy every day, the number of tourists who buy organic food products in their home country, the places where they buy organic food, how much more do they pay for organic food products, and, in general, how wellinformed tourists are regarding organic farming and organic products. The third group of questions focused on the stay of tourists in Istria. These questions required tourists to state whether they would be interested in buying and consuming organic food during their stay in Istria, the extent to which they would be willing to pay a higher price, the type of facility in which they would be interested in consuming organic food, and whether they would be interested in spending their summer holidays in rural Istria. The aim of this paper is to research the existence of a correlation between purchasing power and interest in consuming organic food in Istria, the willingness of tourists to pay a higher price for organic food, the extent to which tourists are informed regarding selling prices, and the level of their interest in spending holidays in rural Istria. The following table illustrates the number of responses of tourists as per individual variable. Table 1 Selection of tourist sample Variable Independent Hotel category Income level Dependent How well informed tourists are on prices of organic food Tourists interest in consuming organic food in Istria Tourists willingness to pay higher prices for organic food Tourists interest in holidaymaking in rural Istria Frequency 1268 591 1161 1257 831 953 % 100 46,6 91,6 99,1 95,30 75,2

Given the methodology by which the survey was conducted, certain questions were left unanswered by tourists. The question regarding income received the least responses. Respondents were not asked to state the category of the hotel in which they were staying; this was done by the interviewers. The purchasing power of tourists is demonstrated through two indicators: the category of the accommodation facility of the respondents and their income. With regard to the category of the facility in which they were staying, respondents were classified into two groups: those staying in three-star hotels and those in four-star hotels. With regard to income, the tourists were asked to state the amount of their monthly income. This question provided five income categories to choose from: up to 500 , up to 1,000 , up to 2,000 , up to 5,000 and above 5,000 . As a variable, income has a normal distribution with 2,000 being the most frequent amount. Responses to the question on income, expressed in other currencies, were calculated into euros on the day of the survey input and then classified into the above categories. The question regarding the interest of tourists in buying organic food was provided with two answers: I am interested and I am not interested. The tourists who expressed an interest in organic food were then asked to state how willing they would be to pay more for this type of food in comparison to conventional food, by selecting one of the following options: up to 30% more, up to 60% more, up to 100% more, and more than 100%. The majority of tourists stated they were willing to pay up to 30% more, while only a very small number of tourists selected one of the higher options. In respect of this, the latter were placed in a new category more than 30% - created upon data entry. To obtain answers regarding the extent to which tourists are informed about selling prices, respondents were asked to assess how well-informed they are about the prices of organic food, by selecting one of the following three options: not informed, partially informed, fully informed. The level of interest in spending holidays in rural Istria was established through three options: I am interested, I am not interested and I dont know. However, only those respondents who selected either the option I am interested or the option I am not interested were taken into account in the analysis. Data were presented graphically and processed using statistical methods. The 2 test was applied in analyzing the correlation of hotel category and dependent variables, because all variables have two levels, with the exception of the informed variable that has three levels. The test was used in analyzing the correlation of

income and the interest of tourists in consuming organic food in Istria, their interest in holidaymaking in rural Istria, and their willingness to pay higher prices. RESULTS AND DISCUSSION The purchasing power of tourists is viewed through two variables: the income of tourists and the category of the hotel in which they are staying. These two variables are used to demonstrate whether a correlation exists between purchasing power and an interest in consuming organic food. The following bar chart illustrates the income pattern of tourists by hotel category. Chart 1 Income pattern of tourists by hotel category 30% 20% 10%
1,52% 4,57% 5,92% 15,57% 9,64% 9,81% 3,55% 5,92%

23,69% 19,80%

3-star hotel 4-star hotel Response rate 46,61%

0%

Up to 500 Up to 1.000 Up to 2.000 Up to 5.000 Over 5.000

The most frequent income category for the entire sample is the category up to 1,000 but not higher than 2,000, which is applied in the case of guests staying in four-star hotels, while in the case of guests staying in three-star hotels, the most frequent income category is more than 2,000 but not more than 5,000. The cross-tabular method was used in analyzing the correlation of dependent and independent variables by individual independent and dependent variable. The bar chart below shows tourists interest in consuming organic food during their visit to Istria by hotel category. Chart 2 Interest of tourist in consuming organic food during their stay in Istria by hotel category

60% 40% 20% 0% Not interested Interested


12,89% 17,74% 21,96%

47,41%

3-star hotel 4-star hotel Response rate 99.13%

A major number of tourists have expressed their interest in buying/consuming organic food during their stay in Istria. More than two thirds of respondents staying in four-star hotels have expressed their interest in consuming organic food, whereas this ratio is lower in the case of tourists in three-star hotels. Following chart presents interest of coastal tourists in holidaymaking in total Istria by hotel category. Generally speaking, tourists to the coastal part of Istria are not interested in spending their summer vacations in the rural parts of Istria. However, with regard to a survey conducted last year, an increase is evident in the number of respondents who have expressed an interest in holidaymaking in rural Istria (Bokovi et al., 2007). Guests staying in three-star hotels are less not interested in vacationing in rural areas, than is the case with tourists in four-star hotels.

Chart 3 Interest of coastal tourists in holidaymaking in rural Istria by hotel category

60% 40% 20% 0%


24,55%

51,00%

9,76%

14,69%

3-star hotel 4-star hotel Response rate 75,16%

Not interested

Interested

The following bar chart illustrates the willingness of tourists to pay higher prices for organic food by hotel category. Chart 4 Tourists willingness to pay higher prices for organic food by hotel category
52,71%

60% 40% 20% 0% Up to 30%


25,39% 15,52% 6,38%

3-star hotel 4-star hotel Response rate 95,30%

Over 30%

It is evident from the bar chart that the majority of tourists are willing to pay up to 30% more for organic food. Slightly more than one-fifth of the tourists surveyed are willing to pay more than 30%, which corresponds almost fully to the willingness of tourists in three-star hotel, while in the case of tourists in four-star hotels, this relationship is only negligibly higher. The next chart demonstrates how well informed tourists are regarding the prices of organic food by hotel category.

Chart 5 Level of tourists ecological consciousness regarding organic food prices by hotel category 40% 20% 0%
16,28% 8,18% 17,05% 9,91%

30,58% 18,00%

3-star hotel 4-star hotel Response rate 91,56%

Not informed

Partially informed Fully informed

When tourists were asked to assess how well informed they were concerning organic food, most of them, almost half, stated that they were partially informed. With regard to hotel category, there are no discrepancies in the number of tourists who are fully informed and those who are poorly informed; the ratio of respondents is identical in both options with regard to hotel category.

Taking into consideration how variables are scaled, an X2 test was carried out to establish whether a correlation exists between hotel category and dependent variables. The following table illustrates the results obtained. Table 2 X2 test Variabla Interest of tourist in consuming organic food during their stay in Istria Interest of coastal tourists in holidaymaking in rural Istria Tourists willingness to pay higher prices for organic food Level of tourists ecological consciousness regarding organic food prices 2 12,798 4,293 0,754 0,481 df 1 1 1 2 p 0,000 0,038 0,385 0,786 0,101 -0,067 0,030 0,020 sig. 0,000 0,038 0,385 0,786

Statistical analysis has confirmed that a correlation does exist between hotel category and whether or not tourists are interested in consuming organic food in Istria, and between hotel category and whether or not coastal tourists are interested in spending their vacation in rural Istria. However, there is no statistical significant relation between hotel category and the willingness of tourists to pay higher prices for organic food and the level to which they are informed about the prices of organic food. The following bar chart illustrates whether or not tourists are interested in buying organic food as per income bracket.

Chart 6 Interest of tourist in consuming organic food during their stay in Istria by income bracket 30% 20% 10% 0%
4,59% 1,36% 17,18% 6,97% 26,53% 22,79%

4,42%

6,97%

6,63% 2,55%

Not interested Interested Response rate 46,37%

Up to 500 Up to 1.000 Up to 2.000 Up to 5.000 Over 5.000

The most frequent income levels fall into the 1,000-2,000 bracket. This is the same group that has expressed the greatest interest in organic food. An identical percentage of respondents in the up-to-2,000 bracket and the up-to-5,000 brackets have stated their indifference to buying organic food during their stay in Istria.

Chart 7 Interest of coastal tourists in holidaymaking in rural Istria by income bracket 30% 20% 10% 0%
4,11% 14,29% 8,01% 4,98% 1,52% 8,66% 6,28% 3,68% 26,19% 22,29%

Not interested Interested

Up to 500 Up to 1.000 Up to 2.000 Up to 5.000 Over 5.000

Response rate 36,44%

Almost 30% of all respondents have stated that they would be interested in spending their vacation in rural Istria. Of these, the most fall into the over-1,000 income brackets. The majority of tourists have stated that they would not be interested in holidaymaking in rural Istria; most of these respondents belong to the up-to2,000 income bracket. Considering that the survey targeted tourists who had decided to spend their holidays in the coastal region, the data obtained indicates a trend of tourist preferences evolving towards holidays in rural areas. The following bar chart demonstrates the willingness of tourists to pay higher prices for organic food as per income patterns. Chart 8 Tourists willingness to pay higher prices for organic food by income bracket 30% 20% 10% 0%
4,55% 0,68% 15,45% 6,36% 7,50% 7,27% 6,59% 1,82% 26,82% 22,95%

Up to 30% Over 30%

Up to 500 Up to 1.000 Up to 2.000 Up to 5.000 Over 5.000

Response rate 50,46%

The large majority of tourists (76% of respondents) have responded that they would be willing to pay up to 30% more. Less than a third of all respondents would be willing to pay a price for organic food that is more than 30% higher. Most of the tourists belonging to this latter group also belong to the up-to-2,000-income bracket and the up-to-5,000-income bracket. To study the correlation between the income of tourists and their interest in consuming organic food during their stay in Istria, their interest in vacationing in rural Istria and their willingness to pay higher pries for organic food, was used. The interest of tourists in consuming organic food during their stay in Istria is expressed as = 0,038, and their willingness to pay higher prices for organic food, as = 0,007, while the interest of coastal tourists in rural holidays is expressed as = 0,055, indicating that the strength of this correlation is less than typical. The next bar chart shows the extent to which tourists are informed of organic food prices as per income patterns. Chart 9 Level of tourists ecological consciousness regarding organic food prices by income bracket 20% 15% 10%
2,56% 8,04% 7,86% 6,76% 8,04% 6,95% 9,14% 4,39% 2,19% 18,28% 14,63%

4,94%

5% 0%

2,38% 0,91%

2,93%

Not informed Partially informed Fully informed

Up to 500 Up to 1.000 Up to 2.000 Up to 5.000 Over 5.000

Response rate 43,14%

The most frequent response of tourists was partially informed. Interestingly, as the income level increases, there is a mild change regarding the options poorly informed and fully informed. It is evident from the chart that there are more respondents belonging to higher-income brackets who have stated that they are fully informed about the selling prices of organic food, than there are respondents belonging to lower-income

brackets. In the lower-income brackets, there are more respondents who have stated that they are poorly informed on the price of organic food. In the over-1,000-income brackets, partially informed respondents prevail. CONCLUSION The aim of this paper is to establish the existence of a correlation between the purchasing power of tourists and their interest in purchasing organic food, spending their vacation in rural areas, their willingness to pay higher prices, and how well informed they are regards selling prices. Purchasing power is illustrated through two variables: the category of the hotel in which the tourists were staying and the level of their income. The most frequent income levels fall in the 1,000 2,000 bracket. There is a fairly high portion of income levels belonging to the 2,000-5,000 bracket. The majority of tourists have stated that they would be interested in consuming organic food during their stay in Istria. Out of these, two-thirds of respondents staying in four-star-hotels have expressed an interest in organic food. Regardless of hotel category, coastal tourists in general are not interested in holidaymaking in rural Istria; however, in comparison to the previous year, there has been a slight increase in the number of respondents stating they would be interested. Only one-fifth of the tourists surveyed are willing to pay more than 30% higher prices for organic food. Considering that the majority of tourists have stated that they are partially informed on the selling price of organic food, this leads to the conclusion that it would be of little avail to offer organic food to the current structure of tourists, without previously undertaking specific action, such as providing information on the advantages of organic food and the other particular features of organic farming. A specific significant correlation does exist between the hotel category and interest in consuming organic food and spending vacations in rural Istria. Tourists with incomes higher than 1,000 have expressed a greater interest in consuming organic food during their visit to Istria. In this group, there is also the greatest number of tourists interested in spending their holidays in rural Istria, as well as the largest number of people willing to pay more than 30% higher prices for organic food. However, the strength of this correlation is less than typical, partially due to the reason that only a small number of tourists responded to the question regarding their income level. Regarding how well informed tourists are about the selling prices of organic food, a slight shift is evident between the options poorly informed and fully informed in favor of the latter, as the level of income rises, while the option partially informed prevails, in principle, in almost all income brackets. REFERENCES Ban, D., erovi Lonar, S. and Oplani, M. (2004). Ekoloka proizvodnja povra u funkciji obogaenja turistike ponude, 2nd Head Conference with international participation Management in Agribusiness, Proceedings (pp. 121-123). Stubike Toplice: Croation Society of Agricultural Economists and Faculty of Agricutlure, University of Zagreb Bokovi, D. and Vukevi, M. (2008). Marketing u turizmu, ekologija i menadment odrivim razvojem. Zagreb: Tipomat Brki, K. (2004). Ekopoljoprivreda u Hrvatskoj. Meridijan, 11(9): 76-79. Cifri, I. (2003): Znaaj iskustva seljake poljoprivrede za ekoloku poljoprivredu. Sociologija sela, 41(1/2): 527. Greene, C. (2008). Dana Track the Expansion of International and U.S. Organic farming. Http://www.ers.usda.gov/amberwaves/september07/pdf/datafeature.pdf. [Accessed the 9th of October 2008, 10:03] Kuen, E. (2002). Muusobna osivnost ekoloke poljoprivrede i turizma. Turizam, 50(1): 79-89 Kuen, E. (2003). Hrvatski ruralni prostor i ekoloka poljoprivreda. Sociologija sela, 41(1/2): 29-45. Leko imi, M. (2002). Marketing hrane. Osijek: Ekonomski fakultet Matasovi, D. (1992). Hrana i prehrana i zdravlje/injenice i miljenja. Zagreb: FOVIS Radoii, V. and Antolovi, M. (2007). Ekoloka poljoprivreda u Istarskoj upaniji. Pore: Odjela za poljoprivredu i umarstvo Istarske upanije. tokovi, I. and Bokovi, D. and Amidi, D. (2007). Demand and eco-production of food in Istria as a new segment of supply in the field of rural tourism, 3rd Biennial International Congress Hotelplan 2007 Congress Proceedings (pp. 179-186). Beograd: The College of Hotel Management. Todorovi, K. (2000). Smjernice za strategiju razvitka ekoloke poljoprivrede u Hrvatskoj. Zbornik radova znanstvenog skupa Izazovi hrvatske poljoprivrede na pragu 21. stoljea (pp. 137-138). Pore: HAED.

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