What is a label worth? Defining

the alternatives to organic for US

wool producers

John C. Bernard

Department of Applied Economics and Statistics, University of Delaware,

Newark, Delaware, USA

Gwendolyn Hustvedt

Department of Family and Consumer Sciences,

Texas State University-San Marcos, San Marcos, Texas, USA, and

Kathryn A. Carroll

Department of Consumer Science, University of Wisconsin-Madison, Madison,

Wisconsin, USA

Abstract

Purpose – As sustainability efforts have increased across the apparel and textile industries,

consumers are being exposed to an increasing variety of information and label claims. The purpose of

this paper is to determine consumer willingness to pay (WTP) for locally produced animal fiber

products with organic and alternative labeling schemes, which included eco-friendly, natural and

sustainable.

Design/methodology/approach – Experimental auctions were used to elicit bids on wool socks

from consumers across three Southern US states. Means were computed for the various bids, as well as

bid differences before and after definitions. To test for significance, non-parametric Wilcoxon signedrank tests for matched pairs were performed for all differences investigated.

Findings – Consumers indicated higher WTP for all versions over conventional wool socks, with the

highest WTP exhibited for organic. WTP for organic versions further increased after definitions were

provided. Natural and eco-friendly versions had larger premiums than sustainable, but this difference

disappeared after definition.

Research limitations/implications – The experimental setting brings the results closer to actual

consumer behavior, but eliminated many additional variables that consumers consider.

Practical implications – The results of this paper indicate that policy makers should consider

definitions and certification for claims besides organic to potentially benefit wool producers.

Originality/value – This research provides consumer WTP comparisons for a variety of labeling

terms currently appearing on wool apparel products. Uncovering this information provides greater

understanding of consumer WTP for wool with such attributes, especially after definitions are

presented.

Keywords Consumer behaviour, Labelling sustainability, Organic, Eco-friendly, Wool,

United States of America

Paper type Research paper

Introduction

Organic production has become the gold standard of the sustainability movement

and fashion products have not been an exception to this rule. However, there are

situations when the organic standards are not a good fit for textile and apparel. The

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1361-2026.htm

Received 19 May 2012

Revised 25 January 2013

Accepted 9 April 2013

Journal of Fashion Marketing and

Management

Vol. 17 No. 3, 2013

pp. 266-279

r Emerald Group Publishing Limited

1361-2026

DOI 10.1108/JFMM-01-2013-0009

The authors would like to acknowledge the support of the USDA Southern Sustainable

Agriculture Research and Education Program for funding this study.

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first issue is that organic standards can apply only to natural fibers and products made

from natural fibers. Another issue is that the organic standards and certification

process administered by the National Organic Program (NOP) under the United State

Department of Agriculture (USDA) were designed to cover the production of food and

food processing. This means that natural fibers must find a fit within the standards

in as much as their production can be related to the production of food. Finally, while

the NOP can certify natural fibers as organic, the certification of textile processing falls

under a different, much less familiar organic standard, the Global Organic Textile

Standard (GOTS). This means that while apparel and textile products can be labeled

as “made from organic fibers,” they can only be labeled as “organic” if they meet the

additional requirements of Global Organic Textile Standard (2011). Another certification

system, the OEKO-TEX system, focusses on testing for the presence of harmful

substances within textiles with separate certification level, OEKO-TEX Standard 100

plus, that includes certification that the textile was “produced at environmentally

friendly production sites” according to their standard (OEKO-TEXsAssociation,

2013).

Animal fiber producers especially face difficulties with the organic certification

system. Their situation is much different from that of cotton, which is also a food

product and has been a natural fit for the NOP crop standards. The certification and

production of organic cotton has expanded rapidly since the NOP began certifying

organic on a national scale in the USA in 2002 (Organic Trade Association (OTA),

2011). In contrast, wool and specialty hair fibers fall under the livestock standards of

the NOP, which administer requirements for the production of organic meat and dairy

products. US wool producers report great difficulty in meeting the requirements to

certify their herds, and hence their wool, as organic. The main issue is that many sheep

ranchers cannot find a method of reliably preventing internal parasites without

treatments banned for meat production under the NOP standards and that even one

treatment for internal parasites with ivermectin, the treatment approved for dairy

cows, renders the sheep permanently incapable of producing certified wool no matter

how many times the sheep is sheared (Druchunas, 2002).

Facing this difficulty, wool producers have begun to explore alternative labeling

schemes that highlight the benefits of their production methods even when one or two

elements of those methods fail to meet the NOP standards. A good example of this

trend is the Wools of New Zealand marketing program. Rather than organic production

methods, the label emphasizes the 100 percent traceability of the fiber as well as the

environmental stewardship, the social responsibility efforts and the animal welfare

commitments of the participating ranch families (Wools of New Zealand, 2011).

Other wool products, made with both imported and domestic wool, are being sold

within the USA with claims such as “eco-friendly,” “sustainable” and “all natural” and

the different producers, manufacturers or retailers selling these products take different

steps to define these terms and provide consumers with some level of reassurance as to

the validity of the claims. While there is no formal data on the prevalence of these

terms in the wool product market, the terms are appearing with greater frequency

with the growth of consumer interest in sustainable fashion products and entire

companies, such as Teko (2011), have been recently founded just to sell sustainably

produced socks.

The objective of this study was to measure consumer willingness to pay (WTP) for

organic and alternative labeling schemes for wool products and the impact on WTP

of providing definitions for these terms. A further objective was to compare the WTP

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for these labeling schemes between USA and imported products to determine if fiber

origin has a significant impact on the value of these labels. Understanding the value of

these alternative labels will allow wool producers to choose a production approach that

presents the best compensation for the costs of implementing production that meets

the definition of the label. Given that many US wool producers are not merely unwilling

but in fact unable to produce organic wool under the current NOP standards, the

results will suggest the potential of alternative labels to present a viable marketing

option for these producers.

Organic wool in the USA

With the organic sector continuing to grow in the USA, it is of no surprise that sales of

organic fiber have followed suit. According to the OTA (2011), the organic fiber sector

experienced a growth of 16 percent from 2009 to 2010, accounting for approximately

$605 million in sales. While demand for organic fiber is therefore apparent, production

of organic wool in the USA remains relatively small. For example, in 2005, organic wool

production was reported at just below 19,000 pounds (Organic Trade Association,

2005).

As noted briefly above, researchers and industry members cite the lack of US

organic standards specific to animal fiber production and processing as the main

reasoning behind the void in organic wool production. At present, organic wool

production falls into the broad category designed for livestock production that fails to

address the special nature of wool as an animal by-product. Examples of current

standards that create great difficulties to producers include sheep having to be

born within the organic system, and the permanent removal of sheep treated with

anti-parasite medications. This treatment often occurs before lambs are even born to

reduce stress on pregnant ewes and setting aside the first fleece sheared from the

lambs would be all that is needed to remove any trace of the drugs from the fiber

supply, if that is the intention of the restriction. As a result these organic standards for

wool production are more stringent than for other products, such as dairy, where the

milk from a treated cow is simply segregated for a set time period (Talley, 2008). The

lack of a national organic standard specific to the wool producing sector leaves many

sheep farmers and ranchers hesitant to transition to or offer organically produced wool

(Druchunas, 2002).

Stolze and Lampkin (2009) explored US organic policy and farming and noted the

challenge stemming from the fact that although organic standards are set by policy

makers, organic farming was developed by producers and consumers long before

the NOP. They argue that current NOP standards may not be meeting the needs of

producers and consumers, and propose modifying organic standards, or providing

definitions for other labels in the marketplace. Taking these concerns into consideration,

should consumers and producers be able to expand the organic standards to fit their

needs? In the absence of responsiveness of the NOP to an entire agricultural sector,

exploring alternative labeling options to organic is one way for such consumers and

producers to express their concern over how well the details of the organic standard

meets their needs.

Literature review

Given the specific challenges facing organic wool producers in the USA, it would

be vital for producers to know if there is evidence of consumer demand and a

higher WTP for an organic wool product. Although at present there are no known

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studies investigating consumer WTP for organic wool, there have been several studies

concerning consumer WTP for organic foods and at least one study that found consumers

willing to pay a premium for organically produced cotton (Hustvedt and Bernard,

2008). Yiridoe et al. (2005) conducted a literature review of some and concluded

consumer WTP for organic products appears to decrease with premium level. Hughner

et al. (2007) performed a similar review, and argued consumer interest in organic

products varied much in part to a lack of basic understanding for what “organic”

means. More recently, Batte et al.’s (2007) study in Ohio found consumers were willing

to pay price premiums for organic products while Bond et al. (2008) concluded

consumers place a monetary value on organic production, and may view organic as

higher quality. With evidence that consumers are willing to pay a premium for organic

foods, a natural extension would be to explore if a similar premium exists for organic

wool products.

As an alternative to producing certified organic wool, some producers are choosing

to identify their wool as natural or all natural. The term natural does not have an

official USDA definition or a certification program. A study of US consumers

conducted by Umberger et al. (2009) found an increased WTP for beef products

designated as natural compared to conventional beef products. However, many of these

consumers also exhibited a lack of understanding of the term natural, and associated

natural with higher levels of product quality or safety. This lack of consumer

understanding for the term natural was also noted by Gifford and Bernard (2011).

Their study showed that, prior to information on the standards for natural and

organic, many consumers believed both had the same requirements.

While some producers are turning to the term natural because they believe US

organic standards for the wool industry to be too stringent, other producers argue

that organic production perhaps is not “organic” enough to meet the original

intentions of the producers and consumers who developed the organic food industry.

In recent years, there has been an argument that organic production is only

partially sustainable in practice (Nardone et al., 2004). Agricultural producers have

responded by identifying their products under the term sustainable. Honeyman

et al. (2006) explored the possibility of creating a niche market for pork producers

through the use of a “Sustainable Pork” label. However, there is currently no official

USDA definition for the term. Researchers such as Nardone et al. (2004) have

previously stressed the need for a formal description and definition as to what

sustainable is.

The growing number of labeling options currently available includes the alternative

eco-friendly. In response to consumer demand for eco-friendly labeling, the EU created

an “Eco-label” which is slated toward the textile industry (Padula, 2008). The EU

label does have a certification process, which is concerned with the sourcing of the

wool fiber, cleaning, spinning, dyeing, and finishing of the fabric. As with the other

potential alternatives to organic, the USDA does not have a formal definition for

environmentally friendly.

Finally, while Hustvedt et al. (2008) did not specifically examine WTP in their study

of labeling for wool products, they did determine that alternative labels such as ecofriendly and animal-friendly were competitive with organic labeling for specific

segments of consumers, which again suggests that the current organic label does not

meet all of the needs of consumers, such as those consumers concerned with animal

welfare. Sheep ranchers in the USA are exploring the potential benefit of animal

welfare certification and Certified Humane, one of the main animal welfare certifies for

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food products, does have a protocol to certify humane production of sheep (Certified

Humane, 2011).

While the labeling alternatives discussed above focussed on the labeling of

production attributes, there is also potential consumer interest in labeling for fiber

origin. Labeling apparel for fiber origin, while not required, is allowed by the Federal

Trade Commission (FTC) regulations for mandated clothing labeling (Federal Trade

Commission, 1999). Consumer WTP for or attitudes toward fiber origin labeling have

been the focus of extensive research involving food products (Loureiro and Umberger,

2003; Insch and Florek, 2009) and other consumer goods (Maronick, 1995). One study of

consumer WTP for fiber origin labeling (Hustvedt and Bernard, 2008) found that some

consumers were willing to pay roughly 10 percent more for cotton socks labeled as

“made with Texas cotton” than a generic pair, but no significant premium associated

with labeling for “made with US cotton.” Given that there is not yet enough organic

wool production in the USA to support product differentiation based on region of

production, a comparison between consumer WTP for USA and imported wool would

likely be better suited for investigation at this time.

In summary, as with other issues related to organic production, the food sector has

been leading the way in the exploration of alternatives to organic labeling. Various

studies suggest that these labels meet consumer needs and the persistence of this issue

suggests that the deficiencies of the organic labeling system for certain product

categories remains to be addressed by the USDA. A study that allows consumers to

directly express their WTP for the alternatives alongside organic and conventional

products would be able to provide guidance for wool producers seeking to choose the

best labeling scheme for their products. By testing WTP for wool products before and

after the provision of a definition for each label, this study is able to measure the level

of benefit from providing a specific definition for terms that are not yet universally

defined.

Methodology

The objectives of this research were accomplished using experimental auctions.

Over the past decade auctions have been used to determine consumer WTP for such

products as genetically modified foods (Huffman et al., 2007; Bernard and Bernard,

2010), food safety and health information (Marette et al., 2008), bison meat (Hobbs et al.,

2006), and T-shirts (Hustvedt and Bernard, 2010). While auctions are one of many

different methods that exist for determining WTP, they have key advantages over

more general methods such as surveys or focus groups[1]. The main advantage of

auctions is that the consequences to the participants in revealing their WTP are real

whereas most other methods are hypothetical in nature. The concern with hypothetical

methods specifically is that some consumers may indicate a high WTP knowing that

there are no monetary consequences for doing so. Studies such as List and Gallet (2001)

have found that this hypothetical bias can lead to WTP estimates from two to 20 times

greater than those found using non-hypothetical methods.

With a non-hypothetical situation, participants understand that they must be

careful with the WTP they reveal as they may end up purchasing the product being

investigated at a real cost. The use of real money removes the inconsequential nature of

typical surveys. Another advantage of auction experiments is that they are incentive

compatible, meaning that it is the participants’ best strategy to reveal their true values.

Most versions of the auctions used stem from Vickrey’s (1961) incentive compatible

second-price auction. In the original version, the highest bidder purchases the item but

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pays a price equal to the second highest bid. The fact that a participant never actually

pays what they bid eliminates the tendency to try and lower bids to get a better deal

that might exist otherwise[2]. This research uses a slight variation that allows for more

purchasers to keep the group of consumers engaged in the experiment (for more details

see Lusk and Shogren, 2007).

The auction experiments were conducted early in 2011 across three southern US

states. Participants were recruited via ads in local newspapers, various online sources,

at local community centers, colleges and churches. The ads referred to the experiment

as a “fiber marketing study” but did not go into specifics to avoid creating a biased

sample (e.g. attracting those just interested in organic issues). In total, 255 participants

took part with 85 in Virginia, 95 in Georgia, and 75 in Texas. The locations were

Alexandria, VA, Athens, GA, and San Marcos, TX. Sessions lasted an hour and a half

and participants received $50 for taking part, plus any extra earnings in a practice

auction, minus money for any sock purchases.

All sessions were conducted in computers labs so that participants could use the

Qualtrics survey system during the auction. Each session began with a computerbased questionnaire designed to collect information on subject’s purchasing habits for

clothing, shopping frequency and opinions and attitudes toward several related

statements measured on a seven-point Likert scale. This was followed by a detailed

presentation on the auction mechanism, the Vickrey fifth-price auction (i.e. the four

highest bidders receive the item, each paying the price of the fifth highest bid),

including examples illustrating the potential to miss out on profits by underbidding or

to lose money by overbidding. To ensure the mechanism and the best strategy of

bidding your true value were understood, a practice auction was conducted using

induced values. The computer randomly generated an induced value for each person

between $0.00 and $1.00 and each person bid against computer generated players.

As noted, these were also non-hypothetical allowing some participants to earn a few

cents extra. Nearly all subjects bid their induced value demonstrating that the strategy

was well understood.

Once it was concluded that everyone understood the mechanism, the sock auctions

were explained. This entailed three other pieces of information. Most importantly,

it was explained that while many auctions would be conducted only one would be

binding. The binding auction was randomly determined prior to the session and the

results sealed in an envelope placed in the front of the room following Bernard and

Bernard (2009). The random, unknown component forces participants to treat all

auctions as real while only having one auction count prevents people from lowering

their bids purposely to avoid buying too many socks. Second, it was stressed they

should enter their values for the various socks and not what they thought they may

cost in a retail outlet. Lastly, it was announced that there was a bid limit of $10 for each

pair of socks.

Next, pairs of wool socks were auctioned off in ten different versions. These

were identified by production method which had five different levels (conventional,

sustainable, all natural, eco-friendly, and organic) with two origin levels each (USA and

imported)[3]. All socks were visible to participants at the front of the room but

handling them was not permitted. Participant bids were entered privately on their

computers and not visible by anyone else.

When that round of auctions was concluded, definitions of each of the production

terms above were presented. The text of these as shown in the sessions is displayed

in Table I. In preparing these, organic was the most straightforward as it was based

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on the guidelines under the NOP. In addition to the text, participants were also shown

the USDA organic logo. Conventional was explained by listing the allowable and typical

practices used in modern agriculture. As noted, however, for the remaining production

techniques there were currently no regulated, or even commonly accepted, definitions.

This includes natural, which, despite appearing often on food products, is only regulated

for meat and poultry products where it deals primarily with processing requirements.

The definitions for these were developed by examining how the terms were defined by

the producers, retailers, and manufacturers who used the terms and provided further

discussion of the terms in their marketing material. Because an additional goal of the

study, not examined here, was to explore the marketing of fiber by state-level origin,

ranchers in each state where sessions were conducted were also interviewed about their

production methods to determine the ability of the chosen definitions to be applied to

their wool products[4]. In order to reassure participants that each sock in the auction was

accurately labeled, socks made in the USA from both domestic and imported fibers were

sourced from a variety of manufacturers who were willing to make both fiber origin and

specific production method claims in their marketing materials.

After the definitions had been discussed, the same ten versions of the wool socks

were auctioned again. Importantly note that no information regarding anyone’s bids

from the earlier round were revealed in order to avoid the possibility of bidder

affiliation. The specific concern would be participants adjusting their values to follow

what others did as has been found in Harrison et al. (2004) and Bernard (2005).

Once the auctions were concluded, participants were asked to complete another set

of questions, including their demographic information. When everyone had finished, a

volunteer opened the envelope and announced to the group which auction was binding.

At that point, the final price and the four purchasers were determined and given the

appropriate socks. Sessions ended with participants being paid and thanked for taking

part.

Results and discussion

The mean bids for the ten socks for both the before and after definition rounds are

displayed in Table II. A few points regarding the bids were quickly apparent. First, as

Term Definition/explanation

Organic Items must be certified to the USDA’s organic standards, and must be inspected and

certified before labeling. This means no synthetic pesticides, hormones or antibiotics,

no irradiation, no artificial coloring or genetically modified (GM) ingredients, and no

petroleum or sewage sludge fertilizers. Organic also means that animals were fed

organic fed, and had access to pasture or the outdoors

Sustainable The wool was produced using a ranching system that is capable of being continued

with minimal long-term effects on the environment. This includes the management of

natural resources, animal health, and the welfare and well-being of ranching families

Eco-friendly The wool was produced with minimal impact to the environment

All natural This wool is a renewable fiber that comes from a natural source, and was processed

with non-hazardous, low-impact chemicals and dyes

Conventional Most products fit in this category, meaning they are not produced locally and do not

meet the requirements of organic. They may have been produced using antibiotics,

hormones, GM, pesticides, and chemical fertilizers, but all with government approval

and within government standards and limits

Table I.

Terms as presented to

auction participants

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expected, the bids for the conventional versions were the lowest in all four cases, often

by a substantial amount. The organic versions, also in line with expectations based

on the current shape of the market, had the highest WTP. While bids for the all natural

versions were the next highest, in most cases these values seemed indistinguishable

from eco-friendly and not overly beyond mean WTP for sustainable versions.

Table II also includes analysis of the difference in bids for each pair of socks before

and after definitions. Since auction bid data is typically not normally distributed,

Shapiro-Wilk tests for normality were first performed on the different version variables

(see He and Bernard, 2011). The results of these tests indicated rejection of normality

for all of the bid series at better than the 1 percent level. Given this, non-parametric

Wilcoxon signed-rank tests for matched pairs were performed in lieu of paired

t-tests for all differences investigated. Consistent across both origin groups, having

definitions significantly altered the mean WTP for the conventional, organic, and

sustainable sock versions but not the eco-friendly or natural versions. Conventional

was the only production method for which bids decreased significantly once participants

read the definitions. There could be two possible reasons for this decline. First, being

reminded of some of the aspects of conventional production that may be viewed

negatively, such as pesticides and antibiotic use, many participants may have

rethought their opinion. In contrast, the descriptions of some of the other versions may

have made them more attractive enough that interest in conventional fell.

The significant increase in bids for the organic versions after definition showed the

importance of making certain that consumers understand the definition of organic.

This backs previous studies showing that while most people are well aware of organic

it is a much smaller group that well knows the attributes required (Hughner et al.,

2007). It appears therefore that producers could benefit substantially by increasing

consumer knowledge regarding organic fiber. The increased WTP for sustainable

wool socks also suggested benefits for explaining the meaning of this claim in the

marketplace. While, as noted, there is little consensus on a definition these findings

demonstrated a strong potential for the wording proposed as a starting point.

The premiums between the different production methods, again both before and

after definitions were given, appear in Table III. As with the findings in Table II, the

patterns of significance were the same across both origins, imported and domestic.

Average bid ($)

Origin Attribute Before definition After definition Difference p-value

Imported Conventional 2.16 1.96 !0.20 0.0011

Eco-friendly 2.90 2.92 0.02 0.6810

All Natural 2.97 2.94 !0.03 0.5240

Organic 3.11 3.36 0.25 0.0043

Sustainable 2.75 2.92 0.17 0.0156

US Conventional 2.28 2.14 !0.14 0.0031

Eco-friendly 3.16 3.15 !0.01 0.8763

All natural 3.17 3.16 !0.01 0.7355

Organic 3.31 3.50 0.19 0.0035

Sustainable 2.90 3.10 0.20 0.0004

Notes: p-values obtained from non-parametric Wilcoxon signed-rank tests for matched pairs. p-values

in italics are significant at the 5 percent level or better

Table II.

Average bids by origin

and attribute; before

and after definition

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For the most part, the level of significance for differences among the production

methods was also consistent across the definition treatments. Most apparent here were

the consistent premiums for all the other methods over conventional at better than the

1 percent level of significance. It was obvious from these results that consumers do

have a clear WTP for products that go beyond conventional fiber production practices.

Introducing the definitions did lead to a clearer differentiation when comparing

organic to the alternatives. For example, prior to the provision of definitions, all

natural was receiving a premium that, while significant at the 5 percent level, was only

14 cents less than the premium for organic. Afterwards, however, the substantially

increased organic premium was significant at the 1 percent level compared with all of

the alternatives. This echoed previous studies such as Gifford and Bernard (2011) that

have shown a large percentage of consumers often equate natural and organic. While

this lack of knowledge may be benefiting producers marketing their fibers as all

natural it shows the potential benefit organic producers should be trying to capture by

ensuring their production attributes are more apparent and better differentiated.

The two comparisons that changed after definitions involved the sustainable claim.

In both cases, there had been a significantly lower WTP for sustainable prior to

the definitions. One of these was with all natural, where the advantage of the latter

vanished once consumers were better able to understand the two methods. The ecofriendly claim also lost its advantage over sustainable to the point where, for the socks

of both domestic and imported origin, there was no difference in the mean bids between

sustainable and the other alternative labels. The only two production methods for

which no significant differences appeared in either set of auctions were eco-friendly

Before definition After definition

Origin Attribute Comparison Difference ($) p-value Difference ($) p-value

Imported Conventional Eco-friendly 0.74 o0.0001 0.96 o0.0001

All Natural 0.81 o0.0001 0.98 o0.0001

Organic 0.95 o0.0001 1.40 o0.0001

Sustainable 0.59 o0.0001 0.96 o0.0001

Organic Eco-friendly !0.21 0.0001 !0.44 o0.0001

All natural !0.14 0.0013 !0.42 o0.0001

Sustainable !0.36 o0.0001 !0.44 o0.0001

Eco-friendly All natural 0.07 0.7257 0.02 0.9826

Sustainable !0.15 0.0144 0.00 0.7215

Sustainable All natural 0.22 0.0052 0.02 0.3864

US Conventional Eco-friendly 0.88 o0.0001 1.01 o0.0001

All natural 0.89 o0.0001 1.02 o0.0001

Organic 1.03 o0.0001 1.36 o0.0001

Sustainable 0.62 o0.0001 0.96 o0.0001

Organic Eco-friendly !0.15 0.0036 !0.35 o0.0001

All natural !0.14 0.0040 !0.34 o0.0001

Sustainable !0.41 o0.0001 !0.40 o0.0001

Eco-friendly All natural 0.01 0.7433 0.01 0.9260

Sustainable !0.26 o0.0001 !0.05 0.7008

Sustainable All natural 0.27 0.0013 0.06 0.5895

Notes: p-values obtained from non-parametric Wilcoxon signed-rank tests for matched pairs. p-values

in italics are significant at the 5 percent level or better

Table III.

Bid differences between

attributes by origin –

before and after definition

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and all natural. As seen in Table II earlier, these were additionally the terms least

effected overall by the definitions.

An additional goal of the study was to determine if there were differences in the

levels of WTP for any of these labels when fiber origin was taken into consideration.

An examination of Table II reveals that the pattern of premiums for the two fiber

origins were substantially similar. In fact, the direction of and significance of change

for each of the labels following the provision of definitions was identical, with

conventional losing, organic and sustainable gaining and eco-friendly and all natural

remaining unchanged. This suggests that there is no meaningful interaction between

any of the production methods and the origin of the fiber.

Conclusions and implications

While organic standards are now implemented and certified by government policy

makers, organic farming has its origins in concerns by both producers and consumers

about the nature of agriculture (Stolze and Lampkin, 2009). Organic producers and

consumers should be equal participants in a dynamic that maximizes the ability

of both parties to foster agricultural production that meets their goals; goals that

traditionally included both environmental protection and animal welfare. The

persistence of alternatives to organic, and the inability of an organic market for organic

wool produced in the USA to develop, both suggest that policy makers should take

a serious look at NOP standards, and reconsider how they are applied to producers

who are raising sheep for wool instead of for meat consumption.

The results of this study provide evidence of an increased consumer WTP for

organic-labeled wool compared to all other labeling versions investigated. For wool

producers who have not found transitioning to organic certification feasible, this

study also supports the suggestion that policy makers in the USA should explore

creating an official definition for the terms sustainable and eco-friendly, either by the

USDA or by the FTC. Compared to conventional wool, there is evidence that providing

consumers with a set definition for both eco-friendly and sustainable would increase

WTP for products bearing each label. The definition of sustainable used for this study

was consciously crafted to reflect the addition of social and economic sustainability

concerns demonstrated by the producers and retailers using the term and the

addition of these concerns, made apparent through the definition, resonated for the

participants. Just as research into the market for locally produced food products has

identified consumer interest in the economic and social value of their connection to

agriculture (Hinrichs, 2000), the success of this definition of sustainability should

provide strong direction for fiber producers and apparel manufacturers who are

looking into alternatives to organic labeling. The development and testing of a

definition for sustainable in the apparel market is a major contribution of this study.

Although formal definitions are available for organic and, to a lesser extent, all

natural, results also suggest that improving consumer understand of the meaning

behind these terms could influence WTP. In the case of organic, findings here indicate

a significant price premium increase for organic wool products after consumers are

presented with the official definition for the term. Future research should explore

whether this increase is due to consumer uncertainty about the applicability of organic

standards to non-food products.

Policy makers aiming to foster domestic wool production should take into

account the potential value of domestic consumer WTP for wool products bearing the

production labels examined in this study. If a set of organic standards specific to wool

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production were to be introduced, coupled with evidence of consumer WTP for organic

wool, producers would have a more solid foundation from which to justify the switch

to organic. With such a large proportion of domestic wool currently being exported,

the results found here suggest there is the same increase in WTP premium for a US

wool product designated as either organic, sustainable, eco-friendly, or all natural as

being currently enjoyed by the greater number of overseas producers who are

providing the vast majority of wool sold in the USA. However, current production

barriers such as the lack of suitable organic standards are likely preventing the

domestic market for such labeled wool products to fully develop.

A natural extension from this study would be to instead focus on consumer WTP

for wool products designated as having been processed under the same labeling

attributes included here. The recently ratified GOTS is utilized by firms processing

imported organic wool to sell to US apparel manufacturers. Should domestic organic

wool production increase in the future, it would be vital for producers and

processors to understand the economic benefits of marketing products that are both

produced with organic fiber and with a certified organic processing method.

Exploring how the price premium for wool products that have been organically

produced and processed interacts with premiums for domestic fiber origin would be

of interest to industry members and policy makers aiming at increasing wool

production in the USA.

Notes

1. See Lee and Hatcher (2001) or Lusk and Hudson (2004) for a review of the strengths and

weaknesses of different WTP methodologies.

2. The auction is theoretically equivalent to the open-outcry auctions typically used for art or

wine. Note in such auctions the purchaser also pays the second highest bid (i.e. where the last

remaining other bidder drops out). A disadvantage in the outcry system is that the true WTP

of the top bidder is never revealed. The second-price auction thus uses sealed bids where

everyone’s values are written and collected.

3. Some additional auctions with socks labeled by state marketing programs were conducted

but are not included in this analysis since a complete set for all the states could not be

collected. This was since a tenet of experimental auctions is that researchers must not use

deception and some of these options were not feasible.

4. Wool purchased from these ranchers was processed, spun and knit into socks by a US

manufacturer with care being taken to ensure the origin of the fiber in each sock could be

traced back to the states where the sessions were conducted. The socks were dyed using a

low-impact dye to ensure that the resulting socks would fully meet the definitions provided

to the consumers. These socks were included in the auctions to measure WTP for state-level

fiber origin, the subject of an upcoming paper.

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About the authors

John C. Bernard is Professor in the Department of Applied Economics and Statistics, and

Associate Director of the Laboratory for Experimental Economics at the University of Delaware.

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His research focuses on consumer willingness to pay for various food and fiber attributes such

as organic or local production.

Gwendolyn Hustvedt is an Associate Professor of Textiles and Fashion Merchandising in the

School of Family & Consumer Sciences at Texas State University-San Marcos. Her area of

research focuses on product development for the lifestyle of health and sustainability consumers

and specifically the marketing of locally and sustainably produced fibers. Gwendolyn Hustvedt

is the corresponding author and can be contacted at: gh21@txstate.edu

Kathryn A. Carroll is a PhD student in the Department of Consumer Science at the University

of Wisconsin-Madison. Her research interests include how marketing affects individual

consumer decision making and preference, as well as consumer willingness to pay for food and

fiber products.

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