WTP For Organic Rice PDF

UNIVERSITI PUTRA MALAYSIA
CONSUMER AWARENESS, PERCEPTION, ATTITUDE AND

WILLINGNESS-TO-PAY FOR ORGANIC RICE
IN KLANG VALLEY, MALAYSIA
OLUSOLA OLUGBENGA IBITOYE
FP 2015 23
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Thesis Submitted to the School of Graduate Studies, Universiti Putra Malaysia, in

the Fulfilment of the Requirements for the Degree of Master of Science
June 2015
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COPYRIGHT
All material contained within the thesis, including without limitation text, logos, icon,
photographs, and all other artwork, is copyright material of Universiti Putra Malaysia
unless otherwise stated. Use may be made of any material contained within the thesis
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for non-commercial purposes from the copyright holder. Commercial use of material
may only be made with the express, prior, written permission of Universiti Putra
Malaysia.
Copyright © Univerisiti Putra Malaysia
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DEDICATION
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This thesis is dedicated to my beloved ones
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My Wife
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&
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My Kids
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Abstract of thesis presented to the Senate of Universiti Putra Malaysia in fulfilment of
the requirements for the degree of Master of Science

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By
June 2015
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Chairman : Nolila Mohd Nawi, PhD
Faculty : Agriculture
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Consumers are now aware about their health, food safety and environment as they are
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worried about the presence of the negative consequences of chemical residues
occasioned by conventional production methods. People are now willing to pay
increasing premium price for organic product since its production process is without
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the use of chemical inputs. As a result, markets for organic products are rapidly
increasing as it is recognized as one of the contributors to a healthy and sustainable
lifestyle. Although, the demand for organic food in Malaysia is growing, local supply is
not enough to meet up with this demand. Despite this shortfall, it is been foreseen that
organic food demand would continue to rise in Malaysia as consumers become more
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health and environmentally conscious. One of these organic food is organic rice.
Demand for organic rice consumption is reported to have increased in Malaysia and
there is a need to understand consumers‟ behaviour toward organic rice. Hence, the
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study investigated Malaysian consumers‟ awareness, factors influencing their purchase

decision and willingness-to-pay (WTP) or no willingness-to-pay (nWTP) towards
organic rice.
The sample size was 834 respondents obtained from well completed structured
questionnaires. Survey was done using primary data collected through mall intercept
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technique from selected shopping malls in Klang Valley. The study was conducted in
Klang Valley because of its features of varying socio-demographic characteristics
among potential consumers. The questionnaire was classified into four sections:
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Section 1 was based on questions related to awareness and attitudinal characteristics of

respondents. Section 2 asked questions related to perception of respondents while
section 3 attempted to understand respondents‟ WTP and to determine their percentage
premium price WTP responses by bid value for organic rice. Finally, section 4 was on
information to determine respondents‟ socio-demographic characteristics. Descriptive
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analysis, cross-tabulation technique using chi-square analysis, correlation analysis,

factor analysis, binary logistic regression and Contingent Valuation Method (CVM)
were employed in the analysis of the data.
The result revealed majority of respondents had heard about organic rice with varying
levels of awareness. Majority of respondents indicated plan to consume organic rice in
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future. Findings showed awareness dependent on gender, race and education of
respondents. Majority of the respondents perceived organic rice as healthier, followed
by more expensive, safer to consume and environmental friendly. Based on factor
analysis, four factors were identified as influencing intention to purchase (ITP) organic
rice namely: Institution intervention, knowledge and awareness, market, and
packaging. Binary logistic regression was employed to predict which mostly impacted
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on the likelihood of respondents‟ ITP among the four factors. Of these four factors,
three significantly predicted ITP. The analysis depicted that Market had the highest
prediction on ITP followed by Institution Intervention and Packaging respectively.
Binary logistic regression also used to examine the effect of socio-demographic
characteristics on the likelihood of respondents‟ WTP or nWTP of organic rice.
Research findings revealed some of the parameters made a unique statistically
significant contribution in predicting respondents‟ WTP towards organic rice. They
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were age (40-49yrs, 50-59yrs, >60yrs), gender, race (Malay and Chinese), and monthly
household income categories (except RM2001-RM4000 income category). This implies
that potential consumers with these statistically significant socio-demographic profiles
could be targeted by marketers as these identified socio-demographic profiles showed
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statistically significant probability or likelihood of increasing respondents‟ WTP
towards organic rice.
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Abstrak tesis yang dikemukakan kepada Senat Universiti Putra Malaysia sebagai
memenuhi keperluan untuk ijazah Master Sains
KESEDARAN, PERSEPSI, KELAKUAN, DAN KESANGGUPAN UNTUK
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MEMBAYAR PENGGUNA BAGI BERAS ORGANIK DI LEMBAH KLANG,
MALAYSIA
Oleh
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Jun 2015
Pengerusi : Nolila Mohd Nawi, PhD
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Fakulti : Pertanian
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Pengguna hari ini lebih peka terhadap kesihatan mereka, keselamatan makan dan
persekitaran kerana mereka menyedari kesan negatif yang diakibatkan oleh sisa bahan
kimia dalam kaedah pengeluaran konvensional. Masyarakat kini sanggup membayar
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harga yang lebih tinggi untuk mendapatkan produk organik kerana proses pengeluaran
yang tidak menggunakan input berasaskan bahan kimia. Hasilnya, pasaran bagi produk
organik meningkat dengan lebih pesat malah produk ini diakui sebagai salah satu
penyumbang utama kepada gaya hidup sihat. Walaupun permintaan untuk makanan
organik di Malaysia semakin bertambah, namun ianya tidak dapat dipenuhi oleh
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pembekal tempatan. Namun yang sedemikian, permintaan bagi makanan organik di

Malaysia dijangka akan terus meningkat kerana pengguna kini lebih peka terhadap
kesihatan dan persekitaran mereka. Beras organik merupakan salah satu daripada
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produk organik. Permintaan bagi beras organik di Malaysia dilaporkan semakin

meningkat dan adalah perlu untuk memahami gelagat pengguna terhadap beras organic.
Maka, kajian ini adalah untuk mengenalpasti kesedaran pengguna, faktor-faktor yang
mempengaruhi keputusan pembelian dan kesanggupan untuk membayar (WTP) atau
ketidak sanggupan untuk membayar (nWTP) beras organik oleh pengguna di Malaysia.
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Seramai 834 responden diperoleh sebagai sampel menggunakan soal selidik

berstruktur. Kaji selidik bagi data primari dibuat di sekitar kawasan pusat membeli-
belah terpilih di dalam kawasan Lembah Klang dengan menggunakan teknik
„intercept‟. Lembah Klang dipilih sebagai kawasan kajian kerana mempunyai ciri-ciri
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sosio demografik yang pelbagai dikalangan pengguna yang berpotensi. Soal selidik
dibahagikan kepada empat bahagian: Seksyen 1 adalah soalan berkaitan dengan
kesedaran dan ciri-ciri sikap pengguna. Seksyen 2 menekankan soalan berkaitan
dengan tanggapan responden manakala seksyen 3 adalah untuk memahami
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kesanggupan responden untuk membayar dan untuk menentukan peratusan harga

premium yang sanggup dibayar oleh responden bagi nilai beras organik. Akhir sekali,
seksyen 4 adalah untuk mengetahui ciri-ciri sosio demografik responden. Analisis
deskriptif, teknik penjadualan silang menggunakan chi kuasa dua, analisis korelasi,
analisis faktor, analisis regresi logistik berganda dan kaedah penilaian kontinjen
digunakan dalam proses menganalisis data.
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Hasil kajian mendapati kebanyakan responden pernah mendengar tentang beras organik
dengan tahap kesedaran yang berbeza. Majoriti daripada responden bercadang untuk
mengambil beras organik pada masa akan datang. Keputusan kajian menunjukkan
bahawa tahap kesedaran berkaitan dengan jantina, kaum, dan juga taraf pelajaran
responden. Kebanyakan daripada responden menganggap beras organik adalah lebih
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sihat, diikuti dengan lebih mahal, selamat untuk dimakan, dan mesra alam. Berdasarkan
keputusan analisis faktor, empat faktor utama telah dikenalpasti mempengaruhi niat
untuk membeli (ITP) pengguna iaitu “Campur Tangan Institusi”, “Pengetahuan dan
Kesedaran”, “Pasaran” dan “Pembungkusan”. Analisis logistik berganda digunakan
bagi meramalkan antara empat faktor tersebut, yang manakah yang paling memberi
kesan dalam mempengaruhi niat untuk membeli (ITP) pengguna. Daripada ke empat
faktor tersebut, tiga faktor yang signifikan dalam mempengaruhi niat untuk membeli
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(ITP). Keputusan kajian menunjukkan “Pasaran” mempunyai pengaruh yang tinggi
diikuti oleh “Campur Tangan Institusi” dan “Pembungkusan”. Analisis logistik
berganda juga digunakan untuk menguji keasn ciri-ciri sosio demografik terhadap
kemungkinan responden dalam kesanggupan untuk membayar (WTP) atau ketidak
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sanggupan untuk membayar (nWTP) beras organik. Hasil kajian telah menunjukkan
sebahagian dari parameter memberi sumbangan unik dalam statistik untuk meramal
tahap kesanggupan responden untuk membayar beras organik. Peringkat umur mereka
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adalah (40-49tahun, 50-59tahun, >60tahun), jantina, kaum (Melayu dan Cina), dan
pendapatan hasil rumah bulanan (kecuali kategori pendapatan RM2001-RM4000). Ini
menunjukkan bahawasanya pengguna yang memenuhi profil sosio demografik ini
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berpontensi untuk dijadikan sasaran oleh agen pemasaran kerana profil sosio
demografik ini telah dibuktikan secara statistik dapat meningkatkan kesanggupan
responden untuk membayar beras organik.
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ACKNOWLEDGEMENTS
First and foremost, I would like to thank the Almighty God for the substance of life, who
made it possible for me to carry through this study. Without his divine source of help, I
would not have been able to pull through. A number of people too numerous to be able
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to mention also contributed one way or the other to the successful completion of this
work and I am greatly indebted to them all.
My sincere in depth and profound gratitude goes to my supervisory committee, Dr Nolila

Mohd Nawi (Chairman), Associate Professor Dr Norsida Man and Dr Nitty Hirawaty
Kamarulzaman. My deep expression of thanks to the chairman, Dr Nolila Mohd Nawi
for her immense contribution, motivation and advice towards the successful completion
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of this study. More so, her immense financial support in the course of the survey. I am
also expressing my appreciation and gratitude to Assoc. Prof. Norsida Man and Dr Nitty
Hirawaty Kamarulzaman who spared no effort in making sure the study went through by
giving their constructive criticism in the course of the study.
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My appreciation would not be complete without saying thank you to my friends that were
also very supportive in the course of the study. Without mincing words, I appreciate my
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darling wife for her full support and patience. She has been responsible for my being in
Malaysia to undertake this study. Her sacrifices have always stunned me. My kids
Oluwasegun and Oluwafunmbi have demonstrated rare patience and sacrifice having to
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bear missing their daddy for the period of this study that I am away from them. My
parents, siblings, and in-laws have also been very supportive in their prayers and
emotional encouragement. I say thank you all.
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This thesis was submitted to the Senate of Universiti Putra Malaysia and has been
accepted as fulfilment of the requirement for the degree of Master of Science. The
members of the Supervisory Committee were as follows:
Nolila Mohd Nawi, PhD
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Senior Lecturer
Faculty of Agriculture
Universiti Putra Malaysia
(Chairman)
Norsida Man, PhD
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Associate Professor
(Member)
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Nitty Hirawaty Kamarulzaman PhD
Senior Lecturer
Universiti Putra Malaysia H
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(Member)
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___________________________
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BUJANG BIN KIM HUAT, PhD

Professor and Dean
School of Graduate Studies
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Date:
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Declaration by graduate student
I hereby confirm that:

 this thesis is my original work
 quotations, illustrations and citations have been duly referenced
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 the thesis has not been submitted previously or comcurrently for any other degree at
any institutions
 intellectual property from the thesis and copyright of thesis are fully-owned by
Universiti Putra Malaysia, as according to the Universiti Putra Malaysia (Research)
Rules 2012;
 written permission must be owned from supervisor and deputy vice –chancellor
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(Research and innovation) before thesis is published (in the form of written, printed
or in electronic form) including books, journals, modules, proceedings, popular
writings, seminar papers, manuscripts, posters, reports, lecture notes, learning
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modules or any other materials as stated in the Universiti Putra Malaysia (Research)
Rules 2012;
 there is no plagiarism or data falsification/fabrication in the thesis, and scholarly
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integrity is upheld as according to the Universiti Putra Malaysia (Graduate Studies)
Rules 2003 (Revision 2012-2013) and the Universiti Putra Malaysia (Research)
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Rules 2012. The thesis has undergone plagiarism detection software
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Signature: Date:
Name and Matric No: Ibitoye Olusola Olugbenga GS34135

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Declaration by Members of Supervisory Committee
This is to confirm that:

 the research conducted and the writing of this thesis was under our supervision;
 supervision responsibilities as stated in the Universiti Putra Malaysia (Graduate
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Studies) Rules 2003 (Revision 2012-2013) were adhered to.
Signature: Signature:
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Name of Name of
Chairman of Member of
Supervisory Supervisory
Committee: Nolila Mohd Nawi, PhD Committee: Norsida Man, PhD
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Signature:
Name of
Member of
Supervisory
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Committee: Nitty Hirawaty Kamarulzaman PhD

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TABLE OF CONTENTS
Page
ABSTRACT i
ABSTRAK iii
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ACKNOWLEDGEMENTS v
APPROVAL vi
DECLARATION viii
LIST OF TABLES xii
LIST OF FIGURES xiv
LIST OF ABBREVIATIONS xv
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CHAPTER
1 INTRODUCTION 1
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2 LITERATURE REVIEW 12
2.1 Consumers’ Awareness for Organic Food Products 12
2.2 Consumers’ Perception for Organic Food Products 14
2.3
2.4
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Consumers’ Attitude for Organic Food Products
Consumers’ Willingness-To-Pay (WTP) for Organic
Food Products
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2.5 Consumer Behaviour 19
2.5.1 Theoretical Framework of Theory of
Planned Behaviour 19
2.6 Summary 22
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3 METHODOLOGY
3.1 Conceptual framework 23
3.2 Data Sources 25
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3.2.1 Primary Data 25

3.2.2 Secondary data 26
3.3 Data Collection 26
3.3.1 Sample Procedures 27
3.3.2 Questionnaire Design 28
3.4 Pilot Survey 28
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3.5 Data Analysis 29

3.5.1 Descriptive Analysis 29
3.5.2 Cross-tabulation Technique using Chi-square Analysis 29
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3.5.3 Correlation Analysis 30

3.5.4 Factor Analysis 31
3.5.5 Binary Logistic Regression Analysis 32
3.5.6 Contingent Valuation Method (CVM) 34
3.5.6.1 Bias in Contingent Valuation Method (CVM) 36
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3.6 Summary 37
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4 RESULTS AND DISCUSSION
4.1 Descriptive Analysis 38
4.1.1 Socio-demographic Profile of Respondents 38
4.1.2 Awareness and Attitude Analysis 41
4.1.3 Perception Analysis 48
4.2 Factor Analysis 52
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4.2.1 Measure of Sampling Adequacy and Correlation
Matrix Significance 52
4.2.2 Communality 53
4.2.3 Varimax Normalization 54
4.2.4 Eigenvalue Criteria 55
4.2.5 Variance explained 55
4.2.6 Factors affecting the Purchase of Organic Rice 55
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4.2.7 Reliability Analysis 58
4.2.8 Predicting Intention To Purchase (ITP) using Binary
Logistic model 58
4.3 Willingness-To-Pay (WTP) for Organic Rice 62
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4.31 Respondents’ Willingness-To-Pay (WTP) Responses
for Organic Rice 62
4.3.2 Predicting WTP based on Selected Socio-
4.4 Summary H
demographic Characteristics using binary logistic
model 63
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5 SUMMARY, CONCLUSION AND RECOMMENDATIONS 70
FOR FUTURE RESEARCH
REFERENCES 75
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APPENDIX 96
BIODATA OF STUDENT 104
LIST OF PUBLICATIONS 105
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LIST OF TABLES
Table Page
1.1 Estimate of Malaysia’s Paddy Planted Area and Production (2004-2013) 3
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1.2 Estimate of Rice Importation and Consumption, Malaysia 2008-2013 4
1.3 Nutritional Benefits of Organic Rice versus Conventional Rice 5
3.1 Predictor Variables to Predict WTP or nWTP Towards Organic rice 34
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4.1 Socio-demographic Profiles of Respondents 40
4.2 Respondents’ Awareness and Attitude toward Organic Rice 42
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4.3 Consumers’ Awareness towards Organic Rice and their
Socio-demographic Characteristics (n=834) 44
4.4
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Relationship between Respondents’ Awareness towards Organic Rice
and their Socio-demographic Characteristics 45
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4.5 Pearson Chi-square Test for the Relationship between Awareness
and Plan to Consume Organic Rice in the Future 47
4.6 Correlation between Awareness towards Organic Rice and Plan to

Consume in the Future 47
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4.7 Respondents’ Perception towards Organic Rice 48

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4.8a Respondents’ Perception towards Organic rice 49
4.8b Respondents’ Perception towards Conventional rice 49
4.9 Summary of Consumer’s Perception towards Organic Rice 51

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4.10 Reliability, Kaiser Meyer-Olkin (KMO) & Bartlett’s Test 53
4.11 Communalities for Items 54

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4.12 Result of Variance Explained 55
4.13 Factors Influencing Consumers’ Purchasing Intention toward Organic Rice 57

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4.14 Internal Reliability Analysis for the Factors 58
4.15 Result of Binary Logistic Regression Predicting ITP for organic rice 60
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4.16 Responses on WTP for Organic Rice if Price higher than Conventional Rice 62
4.17a Classification Table (Block 0) 65
4.17b Classification Table (Block 1) 65
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4.18 Result of Binary Logistic Regression for Factors influencing
WTP for Organic Rice 67
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LIST OF FIGURES
Figure Page
1.0 The Global Market for Organic Food & Drink: Market Growth
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2001-2012 7
2.1 Model of Automation Processes 13
2.2 Effective Factors Influencing Consumers’ Willingness to
Purchase Agricultural Organic Products (AOP) 18
2.3 TRA Model 20
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2.4 TPB Model 22
3.1 Conceptual Framework of Consumer Behaviour towards
Organic Rice (Adapted from Ajzen (1991)). 24
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3.2 Map showing Klang Valley area with its adjoining Cities
and Towns 27
4.1
4.2
Rice in the future (n=834)
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Crosstab between Awareness and Plan to Consume Organic
Respondents’ Percentage Premium Price WTP Responses

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by Bid Value for Organic Rice 63
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LIST OF ABBREVIATIONS
CVM Contingent Valuation Method
DNA Deoxyribo Nucleic Acid
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DV Dependent Variable
H1 Alternative Hypothesis
H0 Null Hypothesis
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HP Hedonic Pricing
IV Independent Variable
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KMO Kaiser-Mayer-Olkin
nWTP No Willingness-To-Pay
PAC
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Percentage Accuracy in Classification
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PBC Perceived Behavioural Control
PPMC Pearson Product Moment Correlation
rpb Point-biserial Correlation

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SSL Self-Sufficiency Level

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SOM Malaysia Organic Scheme
SPSS Statistical Package for the Social Sciences
TCM Travel-Cost Method

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TPB Theory of Planned Behaviour
TRA Theory of Reasoned Action

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WTA Willingness-To-Accept
WTB Willingness-To-Buy
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WTP Willingness-To-Pay
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CHAPTER ONE
INTRODUCTION
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The first chapter of this study discusses the background information on Malaysia, the rice
industry in Malaysia, issues on organic rice versus conventional rice, organic food
consumption and motives for its buying or purchasing. Pragmatic challenges and gaps to
be addressed were discussed in the section for problem statement. The general and
specific objectives were been annotated in this chapter. This is followed by significance
and justification of the study.
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1.1 Background Information on Malaysia
Malaysia consists of three Federal territories and 13 states. It is located in the central
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Southeast Asia. The country lies on latitudes 10 and 80N of the equator and between
longitudes 990 and 1200 E with a land mass of 329,847 km2 (127,350 sqmi). Malaysia’s
population is estimated as 29.2M (CIA World Factbook, 2013), with a density of about
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87/km2. It is separated by the South China Sea into two regions, the Peninsular Malaysia
and Malaysia Borneo (West and East Malaysia respectively). It shares land bordered with
Indonesia in the south and west, Brunei in the east and Thailand in the north. It has
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existing maritime borders with Singapore, Vietnam and the Philippines. The climate of
Malaysia is a tropical one with high temperature (average temperature of 300c) and high
humidity (70-80 percent) all through the year, with very cool nights and very warm days.
The east coast experiences humidity and heavy rains between November and February.
This is brought about by the south-western monsoon and rainfall is about 120 inches a
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year. Heavy rains are experienced in August though varying depending on the prevailing
monsoon winds at the period in the west coast. This variation in precipitation and climate
have been found out to be having significant effects on the production and yield of paddy
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and other crops in Malaysia (Toriman et al., 2013).
1.2 Rice Industry in Malaysia
Rice is a predominant staple food for 17 countries in Asia and the Pacific, nine countries
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in North and South America and eight countries in Africa. It provides 20 percent of the
world’s dietary energy supply, while wheat supplies 19 percent and maize 5 percent
(FAO, 2003). Rice ranks third after wheat and maize in terms of its world consumption
and production respectively (El-Bassam, 2010). Over 95 percent of the world’s rice
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production comes from developing countries with China and India ranking first and
second producing 194.3 million tonnes and 148.3 million tonnes respectively. This is
about 50 percent of the world total production (FAO, 2002). Malaysia ranks 25th position
producing about 2.4 million metric tonnes (Akinbile, El-Latif, Abdullah, & Yusoff,
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2011). Nearly 24 percent (7,605,000 ha) of Malaysia’s land area is composed of land
dedicated to agriculture of which 674,548 ha is planted with rice (Nation Master
Malaysia Agriculture, n.d.) which remained fairly constant since the 1980’s (Sung,
2012). It is grown on the Malaysia Peninsular and on Borneo Islands. About 190,000
hectares of land is dedicated to rice production in Northern Borneo while 300,500
hectares of the Peninsular is dedicated to rice production (Bahiah, Haris, Hamzah, Krauss
& Ismail, 2013). Rice is a strategically important and indigenous industry in Malaysia
having different types of methods for its planting and uses (Omar, 2008). Different types
of preparation and or cooking also accompany rice as some use it for religious and or
cultural purposes. It is considered as Malaysia’s basic staple and political crop (Wong,
2007) despite its contribution of less than one percent to the nation’s Gross Domestic
Product (GDP) (Vengedasalam, Harris & MacAulay, 2011).
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In Malaysia, rice cultivation is the major food crop after oil palm, rubber and coconut as
the country is one of the 25 rice producing countries of the world producing about 2.51
million metric tons per year (FAOSTAT, 2009). Rice cultivation in Malaysia was closely
associated with the rural population and traditional farmers (Man & Sadiya, 2009). Its
cultivation practices changed over the years from transplanting of the crop using animal
power to mechanical transplanting and direct seeding (Omar, 2008). Developing new
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rice cultivars, mechanization using irrigation system brought about this change, which
led to its transformation to a commercial crop in the last 30 years. The once subsistence
farming is now highly regulated and subsidized. For the past 40 years, Malaysia only
managed to double its rice production to 2.23 million metric tons in 2005 compared to
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1.09 million metric tons in 1961 (Nawi, 2012). Presently, domestic rice production can
only cater for about 60-65 percent of Malaysia’s consumption requirements (Abu, 2012)
making the country a major importer of the crop. Malaysia’s rice import has risen from
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one million tonnes to 1.1 million tonnes in 2013-2014 from the previous year (Lyddon,
2014). Rice productivity has been increasing every year from 2.1 ton/ha in 1961 to 3.6
ton/ha in 2008 with an annual increase of 2.0 percent per year or about 28,000 tonnes per
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year even though the land area for rice production has remained rather constant. With an
average consumption of 80 kg per person a year, Malaysia continues to import rice from
other countries (DOS, 2008). Low-cost major exporters neighbouring countries like
Thailand and Vietnam, Indonesia and Cambodia are Malaysia’s major suppliers of rice
(Komentar, 2011), while India and Pakistan majorly supply basmatic and or speciality
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rice, which are the most expensive (Tobias, Molina, Valera, Mottaleb, & Mohanty,
2012). Self-sufficiency has not in any way been guaranteed as over 700,000 tonnes or 30
percent of its rice needs were being imported annually (Akinbile et al., 2011).
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1.2.1 Paddy Production in Malaysia
Malaysia’s paddy production does not enjoy a comparative advantage as the production
process is susceptible to changes in climate and impending natural calamities. These
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phenomena quirks have influenced the government of Malaysia in rolling out and
sustaining a protectionist regime on its rice industry self-sufficiency since 1973 aimed at
achieving food security. These are being achieved using comprehensive market
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interventions in form of subsidies on inputs and outputs, production programmes, import

monopolies, price controls and other forms of restriction in the market. The regime
focused on attaining reasonable production levels geared towards achieving self-
sufficiency in rice production, improving rice farmers’ income, ensuring high quality rice
and price stability (Arshad, Alias, Noh, & Tasrif, 2011). The production of paddy in
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Malaysia has consistently be guarded by policies geared at ensuring three prominent

goals: food security; price stability; and equitable income distribution (Daño & Samonte,
2002). Table 1.1 shows estimates of Malaysia’s paddy planted area and production
figures respectively.
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Table 1.1: Estimate of Malaysia’s Paddy Planted Area and Production (2004-
2013)
Year Planted Area (’000 ha) Production (’000 MT)
2004 667,310 2,291,352
2005 666,823 2,314,378
2006 676,034 2,187,519
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2007 676,111 2,375,604
2008 656,602 2,353,036
2009 674,928 2,511,043
2010 677,884 2,464,831
2011 687,940 2,578,519
2012 684,545 2,599,382
2013 674,332 2,615,845
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Source: Paddy Statistics of Malaysia (2014)
From the table, the land area planted with paddy is fairly constant as shown between the
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year period 2004 to 2013. The table also shows that production increased by about 300
million metric tonnes between the year period 2004 and 2013.
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1.2.2 Rice Importation and Consumption in Malaysia
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The current Malaysian Government’s policy on import supports the nation's self-
sufficiency policy in the production of local rice. This policy is spelt out into attaining a
prominent and reasonable self-sufficiency level (SSL) in local rice production, which is
used as an index to food security in the country (Tey, 2010).
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In the 3rd National Agricultural Plan (1998-2010), SSL was put at 65 percent (MOA,
2010) as the volume of local rice produced largely determines the volume of rice
imported. About 30 percent to 40 percent of Malaysia's domestic rice demand is imported
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by BERNAS annually as to fully meet the rice requirement of the country. The volume
of import by BERNAS is designed to cover shortfalls in demand that local rice
production cannot meet. This is done after the locally produced rice product gets to the
market as to protect the local rice farmers (BERNAS, 2014). Special rice varieties that
cannot be produced locally like basmati and fragrant rice are also imported by BERNAS
to cater for the various types of culinary tastes of our multi-racial society. Total rice
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consumption is estimated to have increased from 2.7 million metric tonnes to 4 million
metric tonnes between the period 1985 and 2009 (Arshad et al., 2011). Consumption of
rice is also stated by another estimate to increase from approximately 2.3 million metric
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tonnes to a projection of about 2.69 million metric tonnes between the period 2010 and
2020 (MOA, 2011). Per capita rice consumption reduced to 79kg from 87kg between
1990 and 2008 as a result of the per capita income increase as well as changes in
preference for food (Arshad et al., 2011). However, rice consumption figure is shown to
have dropped between the year period 2008 and 2013 according to the information
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provided by Paddy Statistics of Malaysia (2014). They also showed the per capita rice
consumption to have reduced from 94.1 kg/person/year to 85.5 kg/person/year between
the year period 2008 and 2013. Table 1.2 shows Malaysia’s rice importation and
consumption estimates according to the Paddy Statistics of Malaysia 2014.
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Table 1.2: Estimates of Rice Importation and Consumption, Malaysia 2008-2013
Year Total Consumption Per
Import(’000 Population
Consumption Capita
MT) (Million)
(’000 MT) (Kg/person/year)
2008 1,093.8 2,610 27.54 94.1
2009 1,084.3 2,704 28.08 96.3
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2010 930.0 2,518 28.59 88.1
2011 1,030.7 2,692 29.06 92.6
2012 1,005.0 2,680 29.52 90.8
2013 876.1 2,561 29.95 85.5
Source: Paddy Statistics of Malaysia (2014)
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1.3 Organic Rice versus Conventional Rice
According to Hammitt (1986), food production accounts for close to half of the more
than one billion pounds of chemicals used in farming. Intensive use of high-inputs in
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modern agriculture has led to greater yields in agricultural productivity to the detriments
of very high environmental and social cost. As a result, sustainability to a greater level
becomes more of the guiding principle in agricultural production as organic farming is
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more getting to the awareness of policy makers, consumers and farmers (De cock, 2005).
One of the possibilities to farm in a more sustainable way is the practising of organic rice
farming (Neeson, 2000). The use of synthetic fertilizers, pesticides or growth regulators
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are prohibited in growing organic produce of all kinds as organic sources of elements are
only required in the growing process.
Organic produce are perceived by consumers as safer and healthier, and expected to have
greater nutritional value (Anderson, Wachenheim, & Lesch, 2006). Although, overall
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organic foods may not be safer than conventionally grown alternatives as there are
perceptions that it is associated with less or no chemical residues (Lo & Matthews, 2002).
This is sometimes questioned because of the potentials for contamination during
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processing, possible environmental contamination and possibility that organic produce

might be carrying higher risk of microbial contamination. This is often because of the
increased use of organic manure than in-organic manure in organic agriculture. Hence,
the perception of an increasing incidence of contamination of pathogens like Escherichia
coli and Salmonella species. There is also possibility of mixing conventional products
and the organic products in the food distribution chain (Schmidt, 1999).
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Ie (2011) reported that organic rice seems to convey to the consumers the perception of
better tasting, fresher, safer and healthier alternative as compared to traditionally or
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conventionally produced rice. Organic rice is a product of a production process that has
not used any chemical or synthetic fertilizer or any pesticide in any of its growth phrase
(Davis, 2005). With respect to rice, some discernible advantages for the environment and
farmers from growing rice organically have been found by Agricultural researchers. This
includes improving the quality of soils by using organic methods (Mendoza, 2004).
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Improved soil quality, defined as looser, deeper mud, made it easier to prepare paddies
and control weeds. Improvement to the higher levels of soil organic matter in organically
managed rice paddies was attributed to as a result of farming practices such as application
of animal manure and crop residue recycling (Mendoza, 2004). Adoption of organic rice
farming had impressively led to increase productivity in yield as against the conventional
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rice cultivation (Yamota & Tan-cruz, 2007). However, scientists found fewer differences
than purchasers might expect in comparing other qualities of organic rice and
conventionally grown rice (Champagne, Bett-Garber, Grimm, & Mcclung, 2007). In the
study of US Department of Agriculture’s Research's Service (2006), less protein was
found in organically grown rice than rice grown with inorganic fertilizer while there
starch and mineral contents do not differ. This implies an health benefit since high protein
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diets have been found to be damaging to liver and kidneys, because they are responsible
for filtering the wastes from protein intake (Nall, 2011).
Researchers however found that organic rice contains more iron than conventional rice
(Worthington, 2004) and less copper than conventional rice (Daniells, 2006). Iron is a
component of haemoglobin in red blood cells, associated with strength, which is also
essential for oxygen transport, synthesis of DNA and a host of other processes in the
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body (Sardi, 2012). Iron deficiency is more common than many people think as only 65-
70 percent of all Americans meet their daily recommended intake according to an
estimate (Noelcke, 2011). Studies showed that high serum level of copper in the body is
associated with increased risk of death from all-causes (Daniells, 2006). Notable of
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serious concern is the consumer report study that found high levels of cancer causing
inorganic arsenic in conventional rice (Kresser, 2012). According to Consumer Reports
Analysis of Federal Health data, people that ate rice had arsenic levels that were 44
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percent greater than those who had not (Durell, 2012). Naturally, arsenic is adjudge as
one of the most common elements on earth occurring in nature in rocks, soils, water and
air (Saldivar & Soto, 2009). Inorganic arsenic is considered a carcinogen, and the
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chemical has been shown to cause a variety of cancer in humans (Neale, 1958). Table
1.3 shows the summary of the nutritional benefits of organic rice over conventional rice
as discussed above.
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Table 1.3: Nutritional Benefits of Organic Rice versus Conventional Rice

Organic Rice Conventional Rice
Contains less protein as high protein diet may be Contains higher level of protein.
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damaging to liver and kidney (Nall, 2011).

Contains more iron (Noelcke, 2011). Contains less of iron.
Contains less copper as high serum level of Contains higher level copper.
copper is associated with increased risk of death
from all-causes (Daniells, 2006).
Does not contain in-organic arsernic (Durell, Contains in-organic arsenic ( a
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2012) type-1 carsinogen)

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1.4 Organic Foods Consumption
In the past decade, organic food market has rapidly grown as they are increasingly
becoming available and affordable in grocery stores and supermarkets (Smith, Huang, &
Lin, 2009). With the advancement of science and technology, knowledge and education
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have exposed humans more to the benefits and advantages of organic products than ever
before (Hui, May, Wei, & Li, 2013). People now become more aware and sensitive to
the surroundings and their environment as consumers all over the world are increasingly
concern about their health as well as the environment’s sustainability. Thus a quality and
healthy lifestyle in this modern generation have become a kind of necessity.
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Consumers are now worried about the presence of the negative consequences of
chemical residues on their health and on the environment in conventional production
methods. As a result, markets for “green” and eco-friendly products are rapidly
increasing (Canavari, Ghelfi, Olson, & Rivaroli, 2007) as it is consumed among others
and recognized as one of the contributors to a healthy and sustainable lifestyle. Organic
consumers are characterized as being affluent, well-educated, concerned about health,
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and quality of product (Richter, Schmid, Freyer, Halpin, & Vetter, 2000). Organic
agriculture includes all agricultural systems that dramatically reduce the use of chemo-
synthetic fertilizers and pesticides and instead allow local soil fertility and natural
capacity of plants and animals to increase both agricultural yields and disease resistance
(IFOAM, 2003). Words commonly associated with organic products are: crops grown in
“natural” environment, chemical free foods, food “not intensively” produced (Davies,
Titterington, & Cochrane, 1995). “Chemical-free” is the most associated word used for
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organic products in the U.S.A followed by “natural” or “home grown”, “healthier” and
“earth friendly” (Raab & Grobe, 2005).
According to Elzakker, Parrot, Chonya, and Adimado (2007), provision of food and
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income through the roles of organic agriculture is now gaining wider recognition. As the
number of people willing to eat organic food and pay premium price increases, the market
for organic products is growing. Rising demand in healthy lifestyle and organic food in
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both developing and developed countries are not just a passing fad as consumption of
food patterns are changing as a result of environmental and health issues. Interest in
organically produced food is increasing throughout the world. The demand globally for
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organic products remain robust, with increasing sales by over five billion US dollars a
year (Willer & Kilcher, 2009). In 2012, statistics showed an healthy growth in the global
organic market with over 64 billion U.S Dollars expended in the consumption of organic
foods and drinks (Willer, Helga, & Lernoud, 2014). Lohr (2000) also stated that the
demand for organic food market is expanding globally growing at a rate of 15-30 percent
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per annum especially in the US, Japan and in the European countries. Likewise in the
Malaysian context, organic food consumption is on the rise as the Malaysian consumers
are becoming more health conscious regarding food intake (Ibrahim, Razak, Shariff,
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Abas, & Ruslan, 2013) as well as the growth of the organic agricultural industry in the
country (Mohamad, Rusdi, & Hashim, 2014). Figure 1.0 shows the trend for organic food
and drink global market growth between 2001-2012.
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Figure 1.0 shows the trend for organic food and drink global market growth between
2001-2012.
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Billions us Dollars
63
50
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28
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18
2001 2004
H 2008 2012
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Figure 1.0: The Global Market for Organic Food & Drink: Market Growth 2001-
2012
Source: The Global Market for Organic Food & Drink (Organic Monitor), 2014
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Organic rice and other organic products are in high demand by health-conscious
consumers because they are considered as premium goods (Pratruangkrai, 2011). The
future of organic rice to a large extent will depend on consumers‟ demand and their
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motive for paying extra price for organically grown rice. Thus, a consumer-oriented
approach will be important to understanding the market and for pursuing better
management of organic rice farming. It is also important to understand consumer
decision-making regarding organic rice produced and seek strategies about how
consumption can be enhanced. Strategies for production and marketing can be
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determined through understanding consumer‟s attitudes and beliefs response to

organically grown rice and their willingness to pay (WTP) a premium price. This is
because organic products are credence goods, consumers may not know whether a
product is produced using conventional or organic methods unless they are told so
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(Giannakas, 2002). Thus knowledge and awareness about organically produced rice
will be critical to consumers‟ attitude and WTP.
Price premium for organic rice exists because of the low supply of organic rice by few
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rice farmers as they do not engage in organic rice farming due to high cost, especially
labour costs. More so, the challenges of transition from conventional to organic
farming (Vetter & Christensen, 1996). The biggest challenge is changing the thinking
of these farmers, access to organic agronomic resources, growing and harvesting
techniques that would bring about high yielding output among others could pose as
challenges (N/A, 2006). High production cost is incurred at the initial stage of shifting
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feature added to organic rice. According to Ballo (2008), (as cited in Cerna, 2010)
premium price in organic rice being sold in the market is essential for the rice farmers to
be assured that they can have profit if they go into organic rice production, thus serve as
an incentive to them. Typically, a significant premium price is offered to organic farmers
which offsets lower output yield because of their greater exposure to risk since they
would not be using standard agricultural chemicals (McClung et al., 2009).
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1.5 Motives for Buying Organic Food Products
The origin of food and the context of its production are less transparent today and
consumers have been distanced from them. This affects how consumers perceive their
food and can be seen as part of the great demand for locally and organically produced
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foods. However, perception is defined as the process by which an individual selects,
organizes and interprets stimuli into a meaningful and coherent picture of the world
(Schiffman & Kanuk, 2004). Buying certified organic products can be seen as a way of
dealing with the complex modern food system and its perceived risks as certified organic
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food products are controlled and bear information about their production (Torjusen,
Lieblein, Wandel & Francis, 2001). According to Pedersen (2003), the perception of
organic products choice as a risk-reducing strategy explains only a part of the decision
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processes and demand for organic food products. Socio-demographic characteristics such
as age, education, income, gender and others are also found to affect consumers’
perception (Rahman, 2012). No single motive exists for buying organic products, often
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there are several reasons working together. Although consumers are not able to determine
food safety before purchase, they are willing to pay higher prices for “healthy products’’
as they seek food safety and hope to obtain greater utility level and at the same time
reducing health risks (Gil, Gracia, & Sanchez, 2000). This is considered an important
constraint to economic efficiency in food safety production and marketing. Determining
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consumers’ WTP for safer and better quality food is a commonly applied method to
estimating food safety benefits (Goldberg & Roosen, 2005).
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Sanders and Richter (2003) indicated the presence of children and income level as factors
influencing buying decision for organic products. High income earning consumers have
a wider range of motives for purchasing organic food and their reasons are more
hedonistic and altruistic, while medium and lower income classes have health and animal
welfare as their main concerns. Households with children also have a wider range of
motives, with animal welfare and environment as the main reasons for buying organic
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products. Contrary to other studies, the health of children and responsibility for the family
are the only minor arguments in Switzerland for buying organic (Sanders & Richter,
2003). Health and nutrition are mentioned before taste and environment as reasons for
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purchasing organic food by consumers in the United States (Hartman Group, 2002).
Organic products are valued by consumers as more tasty, healthy, environmentally
friendly, and nutritious than conventional ones (Saba & Messina, 2003).
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1.6 Problem Statement
The market for organic product is growing with an annual average growth rate of 20-25
percent, not only in Europe and North America but also in many other countries (IFOAM,
2003). This market is growing because more people are willing to eat and pay increasing
premium price for organic food (Aryal, Chaudhary, Pandit, & Sharma, 2009). Food and
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income provision through organic agriculture is now also gaining wider recognition
(Elzakker et al., 2007). In 2001, only 131 hectares (ha) of land in Malaysia were organic
farms but have increased to more than 2,400 ha in 2007 (Rezai, Mohamed, & Shamsudin,
2011). Out of this 2,400 ha, 962 ha are perhaps certified organic, as surveyed by the
Swiss Research Institute of Organic Agriculture (FiBL) and the Foundation Ecology &
Farming (SOEL), Germany, in 2007 (Sung, 2012). Compared to other countries in the
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region, Malaysians are among the most knowledgeable in organic food and their health
benefits. A study conducted in Malaysia showed that over 90 percent of its respondents
were aware and understood all about organic product. It although revealed that the level
of awareness among Malaysian consumers toward Malaysian Organic Scheme (SOM)
was low (Dardak, Zairy, Abidin, & Ali, 2009). These respondents associated organic
products with been natural, healthy foods and free of chemicals while about 55 percent
have consumed organic foods; with more than half consumed them occasionally.
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The Chinese remains the major consumers of organic food in Malaysia, the younger
Chinese generation (mid-thirties and forties) have started to take keen interest in organic
food, unlike in the past where it was mostly the older Chinese generation. Other races
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such as the Malays and Indians have also started to try organic food, although their
numbers still make up a small fraction of Malaysian consumers (Sung, 2012).
Nonetheless, organic agriculture and food are facing several challenges in Malaysia.
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Although the demand for organic food in Malaysia is growing, the supply of local organic
produce is not enough to meet up with the increasing demand. Local supply can fall by
as much as 50 percent in certain periods of the year. Besides the inconsistent supply, the
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varieties of local organic food are also limited while consumers have low level of
awareness towards the Malaysia Organic Scheme (SOM) (Dardak et al., 2009).
Consequently, Malaysia still needs to heavily import organic produce from other
countries, especially from Australia, U.S.A, and New Zealand (Sung, 2012). Another
problem facing organic food consumers in Malaysia is the price difference between
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organic and conventional food. Although, organic food is well known to be more
expensive than conventional food, their price difference in Malaysia is particularly
substantial. This is by as much as 100 to 300 percent, compared to only 25 to 30 percent
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price gap in the U.S.A and E.U. Despite the higher price and limited variety of organic
food in Malaysia, it is been foreseen that organic agriculture and food would continue to
rise rapidly in Malaysia as Malaysians become more health and environmentally aware
(Sung, 2012). One of these organic products is organic rice.
The demand for organically grown rice has increased with increasing demand for organic
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food (Champagne et al., 2007). According to Winfried Scheewe, adviser to the

Cambodian Organic Agriculture Association (COrAA), several ASEAN countries,
including Cambodia, have witnessed a growing demand for organic rice that local
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producers cannot satisfy. Demand for organic rice is on the rise, especially in the
Philippines, Malaysia and Singapore, but also outside ASEAN such as in Hong Kong
and Phnom Penh, there is also more demand (Renzenbrink, 2012). With this increasing
market for organic rice, Malaysia needs continue to import organic rice products to
satisfy demand. Then, one might be provoked to ask why does Malaysia import organic
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rice despite the huge market potential for its domestic demand? With the per capita
income growth of Malaysians, it has generally empowered consumers to have more
purchasing power, more choices for food, health consciousness and demand for more
nutritional values of their food intake (Hanis, Jinap, Nasir, Alias, & Muhammad,
Shahrim, 2012). This may explain their increasing demand for organic rice. Motivated
by the changes in Malaysian consumers’ food choice coupled with arsenic health issues
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recently observed in conventional rice among other concerns, this study investigated
Malaysian consumers’ awareness towards purchasing organic rice and their WTP
premium price for organic rice. While study on marketing of organic products (organic
rice inclusive) is still lacking in Asia as well as in Malaysia (Dardak et al., 2009), the
findings of this study will fill the gap and contribute to the body of knowledge in the area
of marketing of organic rice products in Malaysia.
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1.7 Research Questions
In this study, three specific research questions were addressed. The entire research
questions were developed based on consumers’ awareness, perception, attitude and WTP
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1. What is consumer’s awareness regarding organic rice?
2. What are the factors affecting consumers’ intention to purchase organic rice?
3. How much additional percentage of the price of conventional rice will consumers be
willing to pay for organic rice?
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1.8 Objectives of the Study
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The main objective of this study was to determine consumers’ awareness and WTP for
organic rice in Malaysia.
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The specific objectives of the study were:
1. To determine consumers’ awareness towards organic rice;
2. To identify factors affecting consumers’ intention to purchase organic rice;
3. To determine consumers WTP towards organic rice.
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1.9 Significance of the Study

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This research hopefully will provide theoretical contribution that will enhance
knowledge and understanding on consumers’ behaviour toward organic rice
consumption and their purchase decisions. The research is required to obtain information
in describing consumers’ awareness, perception, attitude and their WTP price premium
towards organic rice as compared to conventionally produced rice in Malaysia.
Information obtained will be significant to the following group:
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1.9.1 The Consumers

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People from both developed and developing countries prefer organic rice over
conventional rice, owing to the innumerable health benefits of organic rice as organic
rice has a far greater quality, as compared to conventional rice (Anuradha, 2001). Thus,
this study will attempt to determine what consumers prioritize in terms of purchases
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between conventional rice and organic rice with higher price premium. Thus, helping
consumers have understanding of what they actually priotize prior to the purchase or
consumption of organic rice.
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1.9.2 The Producer and Marketer
Many studies on agriculture have given much focus on the production aspect of
agricultural commodities, including the technology and processes involved, thus
revealing possible improvements on this aspect without giving similar attention to the
demand aspect (Concepcion, 2005). This study focuses on identifying and understanding
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consumers’ awareness, perception, attitude, factors influencing their intention to
purchase and their WTP for organic rice in Malaysia, which is the demand side of organic
rice agribusiness. This will assist all related parties who are involved in the organic rice
industry such as farmers, wholesalers, retailers, department of agriculture, and others to
have better in-depth knowledge of consumer behaviour as it pertains to organic rice
consumption. This study’s findings are expected to support and facilitate both present
and intending farmers to have more confidence in the potential market for organic rice
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demand and supply. More so, the study aims to advance their knowledge about the
agribusiness market for organic rice in Klang Valley and Malaysia as a whole.
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1.9.3 The Societies/General Public
Organic rice is produced without the use of chemicals, pesticides and other inorganic
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inputs. Its production processes are in harmony with nature and our environment thus
can control and reduce the pollution, providing a better environment-friendly
surrounding to the societies as a whole. Hence, the society/general public would have
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gotten in-depth understanding on the impact of consuming organic rice and organic
products generally as the production processes is being environment friendly.
1.9.4 The Government/Policy Makers

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The knowledge and information garner from the findings of this study will also help
policy makers and Government in making right policies and market plans that could
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possibly help in the drive of organic rice industry and the organic food industry as a
whole. Thus facilitating production of organic rice would not only fulfil the demand of
Malaysians and self-sufficiency, but would also help channel money put into importation
of organic rice to other rational economic activities.
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1.10 Structure of the Thesis
Chapter one gives brief information regarding rice industry in Malaysia, motives for
buying and consuming organic food and consumers’ behaviour towards organic products
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while chapter two provides a review of literatures relevant to this study and the
theoretical framework adapted for the study. Chapter three reviews the methodologies
adopted in previous but similar studies, namely: descriptive analysis; cross-tab analysis
using chi-square; correlation analysis (including point-biserial (rpb) correlation), factor
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analysis; binary logistic regression and contingent valuation methods (CVM). Chapter
four presents the analysis and findings of the study, while Chapter five provides summary
and conclusions relevant to the study.
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CHAPTER TWO
LITERATURE REVIEW
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The chapter contains the theoretical, empirical and methodological contributions of past
related research as it concerns awareness, perception, attitudes and willingness to pay
(WTP) for organic products. The theoretical framework for the study is also discussed
here.
2.1 Consumers’ Awareness for Organic Food Products
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Consumers are defined as any individual or household that use goods and services
generated within an economy (Azrina, Hock, Muhammad, & Sakina, 2011). The term
consumer is often used to describe two different kinds of consuming entities: the personal
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consumer and the organization consumer (Schiffman & Kanuk, 2000). The personal
consumer buys good and service for his/her own use or for the use of the household.
Here, the goods and or services are bought for final consumption. The organization
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consumer buys good and or service in order to run its organization. For the purpose of
this study, the personal consumers were the respondents focused on and surveyed.
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Awareness describes human perception and cognitive reaction to a condition or event. It
does not necessarily imply on understanding (Weiermair, Pechlaner, & Bieger, 2006). It
signifies perception and or knowledge of a situation or facts. Knowledge and awareness
identified as crucial factors in changing attitudinal behaviour of consumers about organic
food products, thus driving growth in the organic food market (Freeland-Graves &
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Nitzke, 2002; Soler, Gil, & Sánchez, 2002). As a result of increasing awareness towards
environmental concern, food safety and health concerns, demand for environmentally
friendly products like organic food products have increased significantly (Briz & Ward,
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2009; Loureiro, Mccluskey, & Mittelhammer, 2001; Nair, 2005). While there is
increasing awareness towards health and environmental problems related to consuming
food with synthetic chemical residues (Squires, Juric, & Cornwell, 2001), quality and
healthy foods are produced from organic farming without using synthetic chemical inputs
(Alizadeh, Javanmardi, Abdollazadeh, & Liaghat, 2008). This implies organic
agriculture not only help maintain environmental sustainability but also improves
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consumers’ health and enhances sustainable benefits both in the economy as well as in
the rural social cohesion (Gracia & Magistris, 2007). Consumers’ knowledge, awareness,
and their consumption of organic food are higher in developed countries than developing
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countries of the world (Briz & Ward, 2009) with knowledge and awareness fast
becoming important factors in changing consumers’ behavioural attitude towards organic
food (Altarawneh, 2013). It has been found out recently through experimental
investigation that many factors affect consumers’ level of awareness towards organic
food (Altarawneh, 2013). Factors such as nutritional knowledge, demographic, food
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buying behaviour, and social formations of consumers are likely to affect their awareness
level towards the purchase of organic food (Gracia & Magistris, 2007).
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In developing demand for organic food products, awareness of these organic products by
the potential consumers should be the first step (Briz & Ward, 2009) even though
awareness level does not necessarily equates with the amount of consumption. The level
of awareness may not necessarily translate to consumption or purchasing due to certain
barriers likely to limit ability of such perceived demand or knowledge to transform into
actual demand. This might be because of distrust for organic labels by potential
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consumers in the developed countries (Giannakas, 2002). As a result, potential
consumers or buyers confuse conventionally produced food for organic food (Agres,
2010). It might also be as a result of reports about mislabelling of organics (Landay,
1996), as awareness is dependent upon ready availability of information and consumers
motivation to learn (Dommeyer & Gross, 2003). Briz and Ward (2009) further
demonstrated in their study that increasing knowledge and awareness could lead to
increased use of organics, but having this complete knowledge does not necessarily
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assure continued use of the organic product. Studies have shown that significant impacts
are imposed on various types of effective consumers’ behaviour due to their awareness
and knowledge toward certain products (Chartrand, 2005; Coulter, Maistre, &
Henderson, 2005; Dommeyer & Gross, 2003; Donoghue & de Klerk, 2009; Guo &
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Meng, 2008; McEachern & Warnaby, 2008; Thomas & Mills, 2006). An example is the
importance of ethical labelling (Hartlieb & Jones, 2009) for humanizing business images.
The ethical labelling has its function in developing ethical qualities about product
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features to create awareness in the consumer and increase knowledge on salient aspects
likely to influence decision or behaviour (Hartlieb & Jones, 2009).
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According to Chartrand (2005), awareness is a constituent element in the human
automatic process involving conscious or unconscious course of actions. The process
involves the environmental features, automatic process and outcome as shown in Figure
2.1.
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Environmen Automatic Outcome

tal feature process (B (C)
(A)
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Figure 2.1: Model of Automatic Processes

Source: (Chartrand, 2005)
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Environmental features include presence of people, events and situations likely to trigger
an automatic process. Processes such as stereotype activation, attitude activation, non-
conscious mimicry and automatic evaluation constitute the automatic process while the
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outcome constitutes items such as emotions, decisions, behaviours, motivations and

judgment. A good example is an idea of proposing a chemical waste disposal plant at
certain location, which serves an environmental feature triggering an automatic process
of rejecting the idea. This could be driven consciously or unconsciously individually.
Chartrand (2005) further expressed in his study that consumers’ awareness consciously
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or unconsciously come before the control, modification, elimination and change in their
behaviour and decision.
2.2 Consumers’ Perception for Organic Food Products
Perception is the identification, organization and interpretation of sensory information in

order to understand and represent the environment (Filippi & Simon, 2014). According
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to Schiffman (2000), perceptions are associated with the organization and related with
the integration of sensory attributes such as to be aware of the occurrence of things and
events rather than being aware of mere attributes and qualities. Its study is a
psychological process with the involvement of meaning, past experiences or memory,
and judgement. Barber and Legge (1976) in their work stated that perception is all about
acquiring, receiving, selecting, transforming and organizing information supplied
through our senses. It is about taste, touch, smell, hearing, vision and moving. Kotler and
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Armstrong (1994) defined perception as the process in which people organize or select
and interpret information to form meaningful picture of the world.
Different individuals have different perception towards organic food products. Their
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perception towards these products are influenced by their lifestyle, culture and the
prevailing market environment at which the organic products are marketed. The way
people think about organic products, the words they associate with the products, and their
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expectation about these organic products determine their perception towards the products
(Dardak et al., 2009). Organic food is often associated with natural processes, non-use of
pesticides and fertilizers, care for the environment and animal welfare (Shafie & Rennie,
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2012). In certain cases, some consumers classified organic products as a niche with an
expected high value (Jonas & Roosen, 2004). Organic products are perceived as branded
products implying images of high quality and because of this, they are sold at high price
premium in specialty shops and purchased by small segment of buyers categorized as
middle and upper income groups (Via & Nucifora, 2002). Conversely, there are
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consumers who perceived organic products negatively. Findings revealed that these
consumers associated organic with lack of credibility, lack of trust, and highly expensive
whether the product is produced according to standard or not (Raab & Grobe, 2005).
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Some people are sceptical whether these products really have positive effect on their
health and life. They tend to perceive organic products as having bad taste, not attractive
and abnormal in shape (Baker, 2007). As a result, consumers are not always willing to
pay the higher premium price for organic food products.
Quality perception by a consumer is influenced by the intrinsic attributes of the product

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as well as by the extrinsic cues and indicators the producer or seller of the product
provides (Caswell, Noelke, & Mojduszka, 2002). Organic product can be classified into
search, experience and credence goods according to the quality level as perceived by the
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consumer at different stages (Darby & Karni, 1973; Nelson, 1970). In 1970 and 1974,
Nelson demonstrated that a product could be perceived as a search good and also as an
experienced good respectively. It is perceived as a search good when consumers can
evaluate information about relevant attributes of the good before buying. Such attributes
as price, colour, size, and dimensions. It is defined as an experience good when
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information about relevant attributes is perceived after it has been consumed. Such
attributes as taste and convenience experienced while eating. In reality, an individual
makes a choice decision in favour of an organic product by comparing a bundle of
characteristics of the product (observable and unobservable). This conception leads to a
view point by economists first developed by Nelson (1970) and Darby & Karni (1973)
logically ascribing such goods as having credence characteristics. Organic food products
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are economic goods with attributes that cannot be revealed through ordinary use or
inspection alone. This implies that the attributes cannot be easily assessed by individual
consumers (Bonti-Ankomah & Yiridoe, 2006). Several studies on economics
consequently analysed organic products as credence goods (Andersen & Philipsen, 1998;
Darby & Karni, 1973; Giannakas, 2002; Hansen, 2001; Nelson, 1970). Andersen and
Philipsen (1998) described a credence good as one in which the buyer’s choice decision
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is dominated by perceptions about the credence characteristics of the product. These
characteristics are qualities difficult to detect and in some cases even impossible to detect
but play important roles in the buying decision-process. The credence characteristics and
quality of organic products are important because a consumer’s perception may not
necessarily be associated with the production processes for the organic but with its
quality attributes (Bonti-Ankomah & Yiridoe, 2006).
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Consumers may not perceive the presence or absence of organic attributes after buying
and using an organic product. As a result, consumers may not have the information to
detect or perceive quality. Thus, there might be asymmetric information about organic
products due to its credence characteristics (Giannakas, 2002). These credence
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characteristics cannot be efficiently and accurately assessed even after buying and or
consumption as the consumer lacks the technical expertise (Gilles & Sandoss, 2001).
Individual consumers only know the product is organic after they may have been
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informed (Giannakas, 2002). So then, there is a need for quality signals such as product
labels, which could be used to help transform credence attributes into search
characteristics (Yiridoe, Bonti-Ankomah, & Martin, 2005). Organic food characteristics
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that may enter consumer’s utility function can be grouped into general (perceived)
attributes and commodity-specific (product) attributes (Hansen, 2001). In contrast, five
broad food quality attributes were identified (Caswell, 2002). They are nutrition, value,
packaging, safety and production process. Consumers may not adequately differentiate
between conventional and organic products with respect to their general attributes. They
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may identify the freshness, visual appeal, and unique taste (sensory characteristics) of a
particular product but may not be sufficient in determining whether a product is organic
or not. As a result, quality attributes like labelling of products may help transform
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credence characteristics into search attributes, thereby consumers buying to better clearly
assess quality of products (Bonti-Ankomah & Yiridoe, 2006).
According to Lancaster (1966), consumer demand theory is inadequate to explain why

consumer buys as many organic products that have higher price than their conventional
alternatives, while some consumers still substitute organic for conventional products. He
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further observed that the traditional theory of consumer demand is silent about providing
insight on how variations in product quality affects perception and decision-making
behaviour of consumers. Neither does it provide information about the intrinsic
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characteristics of a product nor explains how demand changes when one nor more of the
characteristics of a commodity change. More so, consumer demand theory provides
limited explanation about how a new commodity introduced into the market fits into the
preference pattern of consumers over the existing commodity (Lancaster, 1966, 1971,
1991). Limitation or omission of information about the inherent characteristics of a
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commodity in the traditional consumer demand theory makes the theory inadequate in
handling aspects of consumer demand in the contemporary time (Lancaster, 1971) as
intrinsic characteristics actually differentiates between organic and conventionally
produced alternatives.
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Lancaster (1966) proposed an alternative approach to the consumer behaviour theory
consequent to the limitations posed by the traditional theory of consumer demand. In his
approach, it is assumed that consumption is an activity in which commodity, singly or in
combination, are inputs, generating outputs in terms of a collection of characteristics.
Similar characteristics can be generated by different commodities. An example is an
environmental production effect achieved through purchasing organic vegetables or
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organic rice (Hansen, 2001). Utility maximization and product preference ordering is as
a result of a collection of product characteristics, and only indirectly ranks a collection
of the commodity or good through the characteristics they possess. Thus the process of
purchases is seen as buying the characteristics as they are what the consumer values. A
commodity that do not possess all the characteristics the buyer desires cannot be a
dominant commodity no matter how low its prices, while a commodity that has
characteristics not possessed by any other cannot be inefficient no matter how high its
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price.
Consumers are influenced by the information they have about attributes of a product and
the consequences to evaluate the product and make their choices (Shafie & Rennie,
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2012). Their decision and action are influenced by knowledge (Guo & Meng, 2008;
McEachern & Warnaby, 2008). Consumers believe they are more informed if
information on organic food is provided and the information influences their perception
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(Shafie & Rennie, 2012), which in turn affects their attitude.
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2.3 Consumers’ Attitude for Organic Food Products
One of the most important antecedents for explaining and predicting choice of consumers
among products and or services is the attitude of consumers toward consuming a product
(Bredahl, 2001; Cook, Kerr, & Moore, 2002). Decision of consumers to buy are
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influenced strongly by personal (lifestyle, occupation and age), cultural, social (social
roles, status, and family), and psychological (perception, motivation, and attitudes)
reasons (Kotler & Armstrong, 1994). They defined attitude as an individual’s relatively
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consistent feelings, evaluations and tendencies toward an idea or object. Fishbein and
Ajzen (1975) in their work defined an attitude as a learned predisposition to respond in
a consistently favourable or unfavourable manner with respect to a given object. A
number of reasons culminate into consumers’ tendency toward choosing to consume or
not to consume organic food products (Edman, Shuib, & Abdullah, 2012).
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Past studies showed that organic food is consumed for health reasons (Ahmad & Juhdi,
2010; Aryal et al., 2009; Shaharudin, Pani, Mansor, & Elias, 2010), because of
environmental protection (Ahmad & Juhdi, 2010; Voon, Ngui, & Agrawal, 2011),
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commodity attributes, which include packaging, freshness, improved flavour and taste in
organic food products (Aryal et al., 2009), pesticides, chemical residues in
conventionally produced food products (Sangkumchaliang & Huang, 2010). Mervin and
Velmurugan (2013) in their work found out that variables like health, environmental
concern, food safety, sensory variables, prestige, ethical concerns, price premium, socio-
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demographic factors and animal welfare were identified in the review of literatures as
important to examining attitudes of consumers toward organic food. Although, the
degree to which these factors vary according to various demographic profiles, over time
among consumers are still been under researched (Akbari & Asadi, 2008). Attitude of
consumers toward health and environmental concerns are factors that most explain
consumers’ process of decision-making for organic products (Magistris & Gracia, 2008;
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Roitner-Schobesberger, Darnhofer, Somsook, & Vogl, 2008; Tsakiridou, Boutsouki,
Zotos, & Mattas, 2008). However, animal right and environmental issues were found to
have strong influence on attitudes toward organic food (Honkanen, Verplanken, & Olsen,
2006). Honkanen also found out that the more people are concerned about ethical issues,
the more positive attitudes they will have for consuming organic food.
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Relationship between consumers’ attitude and environmental concerns were found out
to have strong correlation (Grankvist, Dahlstrand, & Biel, 2004). In the studies of
Magnusson, Arvola, Hursti, Åberg, and Sjödén (2003), health concern was revealed to
play vital role in shaping attitude and behaviour of consumers. Healthy consumption
lifestyle was also found to be a good predictor of attitude of consumers toward organic
products (Suprapto & Wijaya, 2012). Increasing access to information about organic
food products have been found to improve the organic food knowledge of consumers,
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which positively influence their attitudes toward organic products (Briz & Ward, 2009;
Gil & Soler, 2006). Attitude and belief of individuals are shaped by knowledge and the
relationship between behaviour and knowledge can best be explained using Ajzen’s
theory of Planned Behaviour (TPB). In the study of McEachern and Warnaby (2008),
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knowledge is divided into system knowledge, action-related knowledge and effective
knowledge with each form of knowledge leading to a definite amount of influence on
human decision-making.
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2.4 Consumers’ Willingness-To-Pay (WTP) for Organic Food Products
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Different factors influencing WTP for organic agricultural food products have been
found by different studies in the field of organic agriculture (Pouratashi, 2012). WTP is
the maximum amount a person would be willing-to-pay, exchange or sacrifice in order
to receive a good or to avoid something undesired (Mendis & Edirisinghe, 2013). Market
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for organic product is growing because more people are willing to pay increasing
premium price for organic food (Aryal et al., 2009). They also found out that lack of
information, limited and erratic domestic supplies of organic products were factors
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influencing willingness to purchase organic agricultural products. Ara (2003) found that
health risk is a primary concern for consumers WTP for attributes of organic rice in two
cities in the Philippines. Organic certification was second most important factor in
Manila, while the second highest factor in Naga city was improvement of farm
environment (Ara, 2003). Consumers living further from the production site have higher
demand for certification, while consumers who live closer to farms care more about farm
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environment with lower demand for certification (Ara, 2003).
Cerna (2010) in his study showed that awareness, past purchase, monthly income and
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willingness to buy if product is available were factors influencing WTP for organic rice
in General Santos city. Krissoff (1998) showed in his study that perception about food
safety towards organic food products influence consumers to pay for organic agricultural
products. According to Govindasamy and Italia (1999), age, income, education and
gender are part of the most important factors influencing WTP. Product attributes such
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as freshness, taste, nutritive value and food safety influence consumers’ willingness to
purchase organic products (Bonti-Ankomah & Yiridoe, 2006; Makatouni, 2002).
Meanwhile, consumers use of labelling, experience with products, actual prices
consumers pay were stated by Angulo, Gil, and Tamburo (2008) as the factors
influencing organic food purchases. Krystallis and Chryssohoidis (2005) found out that
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organic products are purchased because they are perceived as having higher quality, safer
to consume than the conventionally produced food products.
Pouratashi (2012) stated in his work that socio-economic characteristics of consumers

and Agricultural Organic Products (AOP) were factors influencing willingness to
purchase the agricultural organic products by consumers as shown in Figure 2.2.
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Meanwhile, Gil et al., (2000) in their study showed that consumers are willing to pay
higher prices for “healthy products” since they obtain greater utility level and at the same
time reducing health risks as they seek food safety. These consumers however are unable
to determine food safety before purchase. This is considered an important constrain to
economic efficiency in the production and marketing of food safety.
Rajabi, Pouratashi, and ShabanAli (2011) found that there are four most highly ranked
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factors affecting and influencing the use of organic products. These factors are education,
improving product attributes, access to organic products and supportive services. Based
on their findings, effective factors influencing consumers’ willingness to purchase
Agricultural Organic Products (AOP) are shown in Figure 2.2.
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Attitude
H Socio-economic
characteristics
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Willingness to
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Purchase AOP
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AOP
Knowledge
characteristics
Figure 2.2: Effective Factors Influencing Consumers’ Willingness to Purchase

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Agricultural Organic Products (AOP)

Source: Rajabi et al., (2011)
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Estimating consumers´ WTP for safer and better quality food is a method commonly
applied to determine the benefits of food safety (Goldberg & Roosen, 2005). Some
methodologies apply primary data derived directly from consumers in measuring WTP.
These methods include contingent valuation techniques, experimental auctions and
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conjoint analysis. The Contingent Valuation Method (CVM) rely on consumers´ elicited
preferences (Lee & Hatcher, 2001).
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Premium price is the percentage additionally charged on organic food that consumers are
WTP when compared to the price of conventional food, while lot of claims are made
about the benefits of organic food in order to justify consumer’s payment for the price
premium (Fillion & Arazi, 2002). The most important criteria used to justify premium
price for organic products in sales arguments were food safety, nature conservation and
taste respectively (Hamm, Gronefeld, & Halpin, 2002). Some individuals often feel
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charges for healthier food by the market are quite high while some assume they cannot
afford to buy organic products.
2.5 Consumer Behaviour
This is the behaviour that consumers display in searching for, purchasing, using,
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evaluating, and disposing of products and services that they expect will satisfy their needs
(Schiffman, Hansen, & Kanuk, 2007). The study of consumer behaviour was also
revealed as a process of selection, buying, and the usage of good and or service to satisfy
an individual’s desire (Solomon, 2006). An official definition of consumer behaviour
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was given as a process or activity that people deal with when seeking, choosing, buying,
using, and evaluating products and or services to satisfy their needs and wants (Belch,
1978).
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In the last three decades, several models and theories in the field of consumer science
have been developed (Mohammadi & Mohamed, 2011). These theories and models have
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been used to describe the buying decision processes. One of the earliest model credited
to Andeason, (1965) presented a basic approach based on problem-solving in the
consumer decision-making process. This model is also referred to as the consumer
information-processing model.
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2.5.1 Theoretical Framework of Theory of Planned Behaviour

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Many explanatory theories have been proposed in an effort to explaining consumer

behaviour (Wu, 2012). Theory of planned behaviour model was chosen over others
because of its advantage of elucidating consumers’ intention to purchase into specific
determinants (Wu, 2012).
The theory of planned behaviour (TPB) is an extension to the theory of reasoned action
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(TRA) (Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975). It is often used to explain
attitudinal processes of individual behaviour (Ajzen, 1991). The TRA is said to be
resulted from attitude research from the Expectancy-Value Models (Ajzen & Fishbein,
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1980), which was followed by the TPB (Ajzen, 1985, 1991). The TRA (Ajzen &
Fishbein, 1969, 1980) provides a model with the potential for predicting behavioural
intentions of an individual to perform, which in turn is a function of his/her attitude
towards the behaviour and his/her subjective norms. The TRA was related to voluntary
behaviour, which later was discovered that behaviour is not 100 percent voluntary but
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that it is under control (Shih & Fan, 2013). This resulted in the inclusion of perceived
behavioural control (PBC). With this addition, the new theory was called the TPB (Shih
& Fan, 2013). This is because TRA has difficulty in explaining behaviours in which an
individual does not have volitional control over (Fen & Sabaruddin, 2008). One peculiar
concept behind the TRA and the TPB is the behavioural intention. This is a factor that
directly motivates an individual to perform a behaviour. Fig 2.3 shows the TRA model.
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Attitude
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Behavioura behaviour
l intention
Subjective
norm
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Figure 2.3: TRA Model
Source: Ajzen and Fishbein (1980)
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Due to its shortcoming of predicting volitional control, the TPB was developed with an
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addition of the construct, perceived behavioural control (PBC). This is because whether
to carry out a behaviour or not is not at all time entirely under an individual’s volitional
control. There may be some factors controlling such individual’s exercise of his/her
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volitional control (Fen & Sabaruddin, 2008). It is hence necessary to examine beyond
the attitude and subjective norm construct in the TRA, and to further develop the TRA
by adding construct that involved behavioural control factor that could influence an
individual’s control over his/her behaviour (Didarloo, Shojaeizadeh, Ardebili, Niknami,
& Hajizadeh, 2011).
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The TPB postulates that behavioural intention to perform a given behaviour is the
immediate antecedent of that behaviour (Ajzen, 2002). The concept of PBC incorporated
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in the TPB help overcome the original TRA model’s limitation in examining behaiours
that individuals have no complete volitional control (Ajzen, 1991). Both the TRA and
the TPB have been very useful in predicting differs range of behaviours (Sheppard,
Hartwick, & Warshaw, 1988). Although, both theories provide framework useful for
predicting behaviour from attitude. Attitude seems to predict at best intentions to
purchase goods. Further more, it is expected that positive attitude towards purchasing
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with social attributes will produce positive correlation with buying frequency, even when
the correlation is weak (Agarwal, 2013). The TPB has been used in several studies. It has
been successfully applied to understanding consumers’ acceptance of products with
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social attributes (Polonsky, Vocino, Grau, Garma, & Ferdous, 2012; Tarkiainen &
Sundqvist, 2009). Several studies have been reviewed using the TPB model and have
been found out that attitude, subjective norms, and perceived behavioural control (PBC)
predicted behavioural intention with high degree of accuracy (Ajzen, 1991).
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From the TPB, individual behaviour is based on beliefs about the consequences of the
behaviour (behavioural beliefs), belief about the normative expectations of other people
and their motivation to comply with these expectations (normative beliefs), and beliefs
about factors present that could enhance or impede behavioural performance and the
perceived power of these factors (control beliefs).
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“Attitude towards behaviour” is the first variable of the TPB model predicting behaviour.
It is the degree to which an individual has a favourable or unfavourable disposition
towards a behaviour in question (Ajzen, 1991). Behavioural belief is proposed by the
theory to have produced attitude towards behaviour. The behavioural belief links the
behaviour to certain outcome or to some attribute by exerting the behaviour. Attributes
linked to particular behaviour are either perceived as positive or negative. Hence,
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behaviour individuals perceived as favourable if they believe it has desirable
consequences. Behaviours perceived as unfavourable if the outcome are undesirable
(Ajzen, 1991). On this basis, behavioural belief produce favourable or unfavourable
attitude towards a behaviour.
The second predictor of behaviour in the TPB is “subjective norm”. This variable refers
to as social pressure to perform or not to perform a behaviour as perceived by individuals.
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This behaviour as mentioned earlier is based on normative belief, which is a result of
perceived social pressure (subjective norm). According to Ajzen (1991), important
referent individuals or groups approve or disapprove certain behaviour. These referents
could be family, religious organizaions, political parties, friends and so on. Socially
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worthy acts by referent others could lead to internally generated feelings of self-respect
or pride. While on the other hand, failure in socially worthy acts may lead to invoking
feelings of shame and self-reproach (Kalafatis, Pollard, East, & Tsogas, 1999).
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The third predictor of behaviour in the TPB is “PBC”. It is a resultant of the control
belief. It refers to the ease or difficulty of getting a given behaviour performed. It is
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reflected in past experience and possible anticipated obstacles or bottleneck in
performing the behaviour (Ajzen, 1991). These combination of attitude towards
behaviour, subjective norm, and perception towards behavioural control result in the
formation of behavioural intention of an individual.
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Attitude
Toward the
Behaviour
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Subjective
Intention Behaviour
Norm
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Perceived
behavioural
control H
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Figure 2.4: TPB Model
Source: Ajzen (1991)
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2.6 Summary
This chapter presents critical and comprehensive review of selected previous research
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endeavoured toward understanding behaviour of consumers through studying about their

awareness, perception, attitude and WTP toward respective agricultural food products. It
explains how the findings of the review relate to this study. This is essential as
understanding prospective consumer behaviour and their WTP toward a product is key
to developing needed marketing strategy geared towards ensuring the product gets to
target market. The theoretical framework applied in the study was also discussed in this
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chapter
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CHAPTER THREE
METHODOLOGY
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This chapter discusses the way the research was carried out in order to achieve the
objectives of the study. Firstly, the conceptual framework for the study was described.
This is followed by the methodology used in conducting the research. According to the
chronology of events of the study, the methodology is structured into sections. These
include: Sources of data, questionnaire design, pilot survey, sampling procedures, data
collection processes and its analysis.
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3.1 Conceptual framework
The conceptual framework used in the study is based on the TPB as it provides theoretical
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foundation for the study. The conceptual framework presents the examined variables and
relationships between them. It consists of the independent variables (IVs) employed to
explain the dependent variable (DV), respondents behaviour regarding their WTP
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towards organic rice in Klang Valley, Malaysia. In this conceptual framework, a person’s
intention to consume or purchase organic rice is a function of his attitude towards organic
rice, the social pressure on him to consume or not to consume organic rice and the ease
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or difficulty of getting to purchase organic rice. Figure 3.1 shows the conceptual
framework used for the purpose of this study.
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ATTITUDE
Knowledge,
perceived
value &
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attitude
SN
Opinions of Purchase Respondent
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referent others Intention s’ WTP
towards
organic rice
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PBC
Advertisement, H Socio-
demographic
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packaging,
institution, characteristic
market ss of
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Figure 3.1: Conceptual Framework of Consumer Behaviour towards Organic Rice

(Adapted from Ajzen (1991)).
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An empirically tested rule according to TPB is that the more favourable an individual’s
attitude, subjective norms and ease to perform a given behaviour, the stronger would be
such individual’s intention towards the behaviour (Ajzen, 1991). For the purpose of this
study, Knowledge, perceived value and attitude are the variables contained in the
determinant attitude. Opinion of referent others (influence of reference groups on an
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individual’s opinion) toward organic rice are variables contained in the determinant
subjective norm while advertisement, packaging, institution and market are the variables
contained in the determinant PBC.
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Ahmad, Rahman, and Rahman (2015) in their study stated that past research work
regarding knowledge proved knowledge has positive influence on attitude towards
organic food products. Other researchers have also reported that greater awareness and
knowledge regarding organic food are having positive influence on attitude towards
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organic food and their level of consumption (Aertsens, Mondelaers, Verbeke, Buysse, &
Huylenbroeck, 2011). Positively perceived value towards a product is also found to bring
about a positive attitude towards same product (Shaharudin, Pani, Mansor, Elias, &
Sadek, 2010). Hence, having influenced on attitude, attitude in turn affects intention to
perform the behaviour (Eri, Islam, & Daud, 2011).
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Individual’s perception of the opinion of referent others (influence of reference groups
on an individual’s opinion) are stated to have positively affected intention, which then
influences performance of behaviour (Ajzen, 1991).
On-line advertisement is found to correlate highly with perceived ease of use (PBC),
which in turn have a positive effect on intention to perform the behaviour (Cauberghe &
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Pelsmacker, 2011). Ecofriendly packaging positively affect perceived ease (PBC) of use,
which in turn influences the likelihood of purchasing beverage (Birgelen, Semeijn, &
Keicher, 2009). Influence of institutions and organizations are found to affect PBC,
which then have influence on conducting the behaviour to be performed (Kim & Stanton,
2012). Access to resources like market that would help perform the behaviour reflects on
the PBC which therefore influences intention (Chiou, 1998).
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Jahangir, Parvez, and Bhattacharjee (2009) described purchase intention as the behaviour
displayed resulting from a consumer’s willingness to buy (WTB) a good and or service.
According to Soler (2004) (as cited in Xia & Zeng, 2006), the gateway into any market
is the purchase intention or WTB position of an individual, which is the initial stage
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before buying. The conceptual framework for this study is also supported by the approach
of Xia and Zeng, (2006). In their framework, they showed that purchase intention or
WTB leads to WTP while WTP is the behaviour performed. Barber, Kuo, Bishop and Jr,
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(2012) in their study also demonstrated that higher purchase intention would lead to
higher WTP. This supports the conceptual framework as it shows purchase intention
leads to respondents WTP towards organic rice.
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Past literature showed selected socio-demographic characteristics have the potential to
predict WTP. Govindasamy and Italia (1999); Piyasiri and Ariyawardana (2002)
demonstrated in their studies using selected socio-demographic characteristics to predict
the probability of increasing WTP or no Willingness-To-Pay (nWTP) for organic food
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products. This also supports the conceptual framework for the study as it depicts socio-
demographic characteristics geared towards predicting the probability of increasing WTP
for organic rice.
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3.2 Data Sources
The study used both primary and secondary data. The secondary data were used in
chapter one to support the write up. Primary data is one of the reliable means of collecting
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data, which in this study, were the raw data gathered directly from respondents.
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3.2.1 Primary Data
The primary data were gathered directly through face-to-face interview of respondents.
The interviews were conducted based on the use of well-structured questionnaires. The
survey was conducted in August and September 2014 through a primary survey of about
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850 respondents in Klang Valley area, Malaysia. The structured questionnaire was
designed to explore consumers’ level of awareness, perception, attitude and willingness-
to-pay (WTP) a premium price for organic rice by granting personal interview to
respondents at shopping malls that were earlier identified as selling organic products. An
average of 10-15 minutes was used to complete each of the questionnaire while
interviewing respondents.
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3.2.2 Secondary data
Secondary data are gathered from sources like journals, books, libraries, internet and
many related websites. The data related to the Malaysian rice production, importation
and consumption figure used in this study was obtained from the internet as a secondary
data.
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3.3 Data Collection
Klang Valley (Lembah Klang) is located in the state of Selangor. It comprises of Kuala
Lumpur and its suburbs, with adjoining cities and towns. Geographically, Klang Valley
is delineated by Titiwangsa Mountains to the north and east and the Strait of Malacca to
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the west. It is made up of large number of cities, towns and other urban areas. Through
population growth and physical expansion, these towns and cities merged to form one
continuous urban and industrially developed place. This makes Klang Valley the
heartland of Malaysia’s commerce and industry. Klang Valley was chosen as the study
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area because of its features of varying socio-demographic characteristics among potential
consumers with a population of about 7.5 million as of 2012 (Anonymous, 2013). Klang
Valley was also chosen because consumers from all works of life do their shopping there
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while most shopping malls and supermarkets are located within the Klang Valley area.
Areas visited among the adjoining towns and cities are in Kuala Lumpur and Selangor
such as Ampang, Shah Alam, Klang and Putrajaya respectively. Interviews were
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conducted in 7-Eleven, AEON, Tesco and Giant. More so, according to (Stanton, Emms,
& Sia, 2011), about 65 percent of organic market sizes are located in the Klang Valley
area. Figure 3.2 shows the map of Klang Valley area with its adjoining cities and towns.
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Figure. 3.2: Map showing Klang Valley area with its adjoining Cities and Towns
Source: https://en.wikipedia.org/wiki/Klang_Valley
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3.3.1 Sample Procedures
The mall intercept technique was employed in this study. This technique involved
interviewing every tenth respondent that passes through the mall area. Samples for the
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consumers were collected through this mall intercept survey as respondents were
intercepted randomly and invited for interview at the shopping malls and supermarkets
in the Klang Valley area with organic market sizes. Using a sample size calculator, the
consumers’ sample size would be 1,067 (population=7.5Million, CF=95%, CI=3%)
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where CF and CI are the confidence level and confidence interval respectively. But due
to limited resources, only about 850 sample responses were collected, which were
expected to give results representative of the population.
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3.3.2 Questionnaire Design
The questionnaire administered for the purpose of this study was made of structured
questions, which were divided into two forms: Dichotomous Choice (DC) and Multiple
Choice (MC) questions. A dichotomous choice question offers two choices of answers:
a “yes” or “no”, while the multiple choice questions offer more than two choices of
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answer. It has four classifications or sections as follows:
i. Awareness and Attitudinal characteristics:
In this section, question asked was to determine awareness and attitude of respondents
toward organic rice. Respondent’s sources of information about organic rice, questions
asking if they have consumed or purchased organic rice before, reasons for consuming
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and what influenced them to consume organic rice.
ii. Perception towards Organic rice:
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Section two asked questions as regard respondent’s perception towards organic rice and
comparing the level of their perception between organic and conventional rice.
iii. Willingness-To-Pay (WTP) Analysis:
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This section attempts to understand respondents’ WTP and to identify their percentage
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premium price WTP responses by bid value for organic rice.
iv. Socio-demographic Profile:
Here, information about respondents’ socio-demographic profile was solicited by asking

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questions related to their socio-demographic characteristics.

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3.4 Pilot Survey
Pilot study is always initially being conducted at small scale before conducting it at full
scale (Gay, Mills, & Airasian, 2011). This is an important part of a questionnaire
construction process. Pilot study is also referred to as “dress rehearsals”, or “field test”
(Caspar, Peytcheva, & Cibelli, 2011). It is also known as pre-testing. Pre-testing or
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piloting involves testing your research instruments in circumstances as similar as

possible to the research situation. Though, this is not for the purpose of collecting or
reporting results but rather to check for possible inadequacies in wording of questions,
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clarity in the instructions, and anything that could impede ability of the instrument to
collect data in a systematic and economical fashion. The pilot survey could avail
reseachers to adjust potential problems identified and modify the questionnaire. This
would help render questionnaire error-free as researcher get familiarized with vague and
unclear questions embedded in the questionnaire, which are subsequently adjusted
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(Chao, 2001). For a pilot survey, the sample size is usually small as it is conducted in a
small scale of 15-30 sample questionnaires surveyed (Malhotra, 2008). For the purpose
of this study, 50 samples of the questionnaire were initially distributed to identify
possible weaknesses and to evaluate its validity and reliability before the actual survey
commenced. Based on respondents’ comment and suggestion, some questions required
modification and were modified.
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3.5 Data Analysis
This section focused on the approaches used to analyse and interpret the data. Data
obtained from this survey was encoded into the Statistical Package for the Social
Sciences (SPSS) software version 22.0. Excel 2010 was also used for drawing figures,
tables and for additional calculations. Based on previous research study, the appropriate
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data analysis methods were chosen. The appropriate approaches and methods chosen
included: descriptive analysis, cross-tab technique using chi-square analysis, correlation
analysis (including point-biserial (rpb) correlation), factor analysis, binary logistic
regression analysis and contingent valuation method (CVM). These approaches and
methods chosen were applied to achieve the objective of the study through examining
and testing the relationship between the independent variables and dependent variables
based on the conceptual framework.
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3.5.1 Descriptive Analysis
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Descriptive analysis technique is used to describe characteristics of variables in terms of
frequencies and percentages of distribution of the survey data. Comparison among
variables can also be made using the descriptive techniques. The descriptive analysis
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shows information about the sample population been studied at a glance in charts, figures,
and frequency distribution. The analysis comprised of summary derived from samples
used to graphically illustrate the data. This gives clear descriptions of the univariate
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questions and the hypothesis of variables concerned. This technique is also concerned
with the way data are collected and organized. It is also used to discuss respondents’
socio-demographic profile in terms of their distribution and percentages. Respondents’
perception and attitude analyses used this same technique in terms of its frequencies and
percentages.
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3.5.2 Cross-tabulation Technique using Chi-square Analysis

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This analysis involved sampling from one population and when characterizing each
respondent on only two different categorical (nominal or ordinal) variables. Cross-
tabulation technique is used to determine whether these two categorical variables are
statistically independent or if they are associated. For the purpose of this study, it
involves displaying a joint frequency distribution of cases by their values based on two
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categorical variables (contingency table analysis). This joint frequency distribution is

analysed with the chi-square statistic (χ2) to determine whether the variables are
statistically independent or if they are associated. This cross-tabulation technique using
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chi-square analysis was employed in the study to test if there is a statistically significant
association between respondents’ awareness towards organic rice and their socio-
demographic profiles. The null and alternative hypothesis were introduced as follows:
H01: There is no significant association between respondents’ socio-demographic

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profiles and their awareness towards organic rice.

H1: There is significant association between respondents’ socio-demographic profiles
and their awareness towards organic rice.
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3.5.3 Correlation Analysis
The Pearson Product Moment Correlation (PPMC) is denoted by “r” and it is used to
assess the degree at which quantitative variables are linearly related in a sample (Benesty,
Chen, Huang, & Cohen, 2009; Lieberman-aiden et al., 2009). In other word, the PPMC
is used to test the linear relationship between two quantitative variables. This implies the
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analysis is used to show the magnitude and direction of the relationship or association
between the relevant dependent (DV) and independent variables (IV).
To use the PPMC, each case must have scores on two quantitative continuous variables
measured on the interval or ratio scale. The appropriate correlation coefficient to use
depends largely on the scales at which the DV and IV were measured. For the purpose
of this study, the IV was knowledge and awareness levels of respondents toward organic
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rice while the DV was respondents’ plan to consume organic rice in future if the organic
rice is readily available in the market. The independent variable was measured as a
continuous scale variable while the dependent variable was measured as a discrete
dichotomous variable. For this purpose, the requirement satisfies using a special type of
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PPMC called Point-biserial correlation (rpb). In this analysis, the DV was measured as a
discrete dichotomous variable while the IV was measured as a continuous IV. This was
the reason why Point-biserial (rpb) Pearson correlation was employed.
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Point-biserial correlation (rpb) is a special type of Pearson correlation used to measure
association between a continuous independent variable and a discrete dichotomous
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dependent variable (Field, Miles, & Zoe, 2012). The r-value for a correlation coefficient
ranges between -1 to +1. If the r-value is 0, it indicates that there is no linear relationship
between the DV and IV. If the r-value is +1, it indicates a perfect positive linear
relationship between the DV and the IV. This implies that as one variable increases in its
value, the other variable also increases in value. Also, r-value of -1 indicates a perfect
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negative relationship between the DV and IV implying that if one variable increases in
its value, the other variable decreases in value.
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According to Cohen (1988), interpretation for r-value is given as follows:
r = 0.10 to 0.29 or r = -0.10 to -0.29 (small)

r = 0.30 to 0.49 or r = -0.30 to -0.49 (medium)
r = 0.50 to 1.0 or r = -0.50 to -1.0 (large)
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In this study, the rpb was employed to test the relationship between respondents’
awareness towards organic rice and their plan to consume organic rice in the future if
readily available in the market. The null and alternative hypothesis were introduced as
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follows:
H02: There is no positive and significant relationship between respondents’ awareness

towards organic rice and their plan to consume organic rice in future if readily
available in the market
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H2: There is a positive and significant relationship between respondents’ awareness

towards organic rice and their plan to consume organic rice in future if readily
available in the market
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In the decision criteria, H0 is rejected if p-value becomes less than 0.5 at 95 percent
confidence level while you fail to reject H0 if the p-value is greater than 0.5 at 95 percent
confidence level (Anderson, Coltman, Timothy, Devinney, & Keating, 2010).
3.5.4 Factor Analysis
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This is a general scientific method for data analysis with no restriction to the data content
used. The procedure takes a number of variables or items, 34 in this study and
investigates them to determine whether they have small number of factors in common,
which accounts for their inter-correlation. Factor analysis is a multivariate statistical
technique used to determine latent variables or factors among observed variables by
reducing the number of variables and group variables with homogenous characteristics.
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It uses a linear approach in the reduction and summarization of data and comprises a
large set of techniques with purposes that are similar.
This factor analysis is used to reduce the 34 items or variables in the study to a
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manageable level so that the basic structure underlying the set of items or variables can
be found. The procedure involves grouping variables into independent factors, with each
of the factors representing a scale of certain dimension with scores or weights given to
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the variables. With this kind of analysis, a small number of factors from a large number
of variables would be capable of explaining the observed variance from this large number
of variables. Factor analysis procedure usually involves four independent steps in its
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most basic form:
i. A correlation matrix is computed for all the variables. Variables not

related to the other variables are identified from the matrix and
associated statistics. A correlation matrix is a rectangular array of the
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correlation coefficients of the variables with one another.

ii. To extract a set of initial components or factors from the correlation
matrix that was developed in the first step so that the data can be
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determined. Principal Component Analysis (PCA) will be used to

extract factors producing one component for each variable. Though
analysis will yield as many factors as variables, the smaller factors, in
term of accounted variable variance, which are dropped if the value is
less than or equal to 0.5. Although, the correlation coefficient among
the variables or items vary depending on the sample size. The larger
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the sample size, the better the correlation coefficient among the
variables or items. However, Tabachnick & Fidell (2007) suggested a
minimum sample size of 300 and strength of inter-item correlation of
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greater than 0.3. So, a set of factors formed as a linear combination of

the variables in correlation matrix. The first factor would be the best
linear combination of variables that would account for more of the
variance in the data as a whole.
iii. The initial components or factors are rotated using the orthogonal
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(varimax) rotation in order to maximize the relationship between the

variables and some of the factors to find a final solution and make them
more interpretable.
iv. Scores for each factor will be computed and used for other variety of
analysis.
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The factors can be inferred from the observed variables and can be estimated as linear
combinations of them. The general estimation of j th factor Fj can be written as,
Fj = ∑ Wji Xi = Wj1 X1 + Wj2 X2 +. . Wjp Xp
Where,
Wj’s = factor score coefficients
p = number of variables
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3.5.5 Binary Logistic Regression Analysis
Logistic regression analysis is an alternative to multiple regression analysis. It is used to

predict a categorical dichotomous outcome variable from a set of continuous or
categorical predictor variables. It is used when the categorical dichotomous outcome
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variable violates the assumption of linearity in normal regression analysis. While
emphasizing the probability of occurrence of a particular outcome for each case, it would
also determine the relationships among the constructs. Logistic regression analysis was
used in the study to predict the probability of the outcome for consumers’ WTP a price
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premium for consuming organic rice for each of the predictor factors that could possibly
influence their WTP. The use of logistic regression method to determine factors
influencing WTP for organic rice is justified by the work of Wanninayake and Shantha
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(2014). In their work, they used binary logistic probability model to determine WTP for
selected organic rice in Colombo districts, Sri Lanka.
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The observed and predicted values of the outcome are used to assess the fit of a given
model. The log-likelihood statistics are used to measure the fit of the model. The log-
likelihood statistics is the sum of probabilities associated with the actual and predicted
outcomes. It is comparable to the sum of squared residuals (SSR) in multiple linear
regressions. It is essential to calculate the log-likelihood for the model with the predictor
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variables and the model without the predictor variables (for example, the baseline model
predicted by SPSS). Comparing the log-likelihood between these two models enable us
to measure how well in improvement the model with the predictor variables was able to
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predict the outcome as against the model without the predictor variables (baseline
model). These two models can be compared by computing the differences in their log-
likelihood using chi-square (χ2). Contribution of individual predictor variable towards
predicting the outcome variable can also be determined using the wald statistics. The
wald statistics is the squared ratio of the unstandardized logistic coefficient to its standard
error. It is comparable to t-test in multiple regression analysis. A number of statistical
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tools can be employed as a measure of relationship or association between predictors and

the outcome. They include: The R-statistics; Cox and Snell’s R2; Nagelkerke R2; Hosmer
and Lemeshow’s R2. SPSS identifies Hosmer and Lemeshow’s R2 as the most reliable
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test among the others.
The odds ratio indicates a change in odds (likelihood) as a result of a unit change in a
predictor. It is the increase or decrease (if the ratio is less than one) in odds of being in
one outcome category when the predictor increases by one unit. The odds of an outcome
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occurring is defined as the probability of an outcome occurring divided by the probability

of the outcome not occurring. It is given by:
Odd= Pr (occurrence)/ Pr (no occurrence).
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According to Hanemann (1984), logistic regression is used to estimate WTP using the
dichotomous method. The logistic model is estimated with the maximum likelihood
estimation method Capps and Kramer (1985). Here, respondents were asked whether
they were willing to pay a price premium for organic rice or not. Answers given by
respondents were assumed based on the organic and conventional prices found when
choosing organic rice over conventional rice.
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The dichotomous method respondents used in responding to their WTP for organic rice
has two options of a “yes” or “no”, which are the dependent variables. Binary logistic
regression was used to determine factors affecting or predicting WTP for organic rice.
The predictor variables were combination of continuous and categorical variables. The
probability of saying “YES”/”NO” to a bid at different level of the independent variable
is estimated as,
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P= (1-e-x)-1
Where x is an estimated logit regression equation and P is the probability of accepting
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the price. This binary logistic model was employed in this study to predict respondents’
willingness to pay (WTP) or no willingness to pay (nWTP) towards organic rice.
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Table 3.1 presents the predictor variables (respondents’ Socio-demographic profiles) and
their coding system. The categorical predictor variables in the binary logistic analysis
were transformed into dummy variables by the the SPSS version 22.0 software used for
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the analysis. For the purpose of this analysis, the procedure used in the SPSS software
involved moving these categorical predictor variables into the categorical covariates box
to define the categorical variables. Then highlight each of these categorical variables in
turn and click on the button labelled “first” in the “change contrast” section. This will set
the group to be used as the reference from the variable categories as the first group listed.
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Table 3.1: Predictor Variables to Predict WTP or nWTP Towards Organic rice
Variables Coding System
Age (years) 1 =20-29 2 =30-39
3 =40-49 4 =50-59
5 =≥ 60
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Gender 0 =Female 1 =Male
Race 1 = Malay 2 =Chinese

3 =India 4 =Others
Household size 1 =1-5 2 =6-10
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No. of family members ≥21yrs 1 =1-5 2 =6-10
Monthly household income (RM) 1 =2,000 & below 2 =2,000-4,000

3 =4,001-6,000 4 =6,001-8,000
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5 = 8,001-10,000 6 =10,001-12,000
Educational level 1 = Never 2 =Primary
Occupation H 3 =Secondary
1 =Public
4 College/University
2 =Private
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3 =Self-employed 4 =House wife
5 =Others
Marital status 1 =Single 2 =Married

3 =Divorced 4 =Widow/Widower
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NOTE: The dependent variable (DV) is nWTP or WTP denoted as 0 and 1

respectively.
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3.5.6 Contingent Valuation Method (CVM)
A number of methods have been developed to help in assessing monetary values of non-
marketable goods. Of all these methods, there are four most common (Rahman, 2007).
They include: the Contingent Valuation Method (CVM); the Travel-Cost Method
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(TCM); Hedonic Pricing (HP); and Production Function Approaches (Hanley & Spash,
1994). For the purpose of this study, only the CVM was used. The CVM is a methodology
widely used by researchers to evaluate values of unpriced goods and services especially
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environmental related goods (Frykblom, 1997). It is used to assess values of non-market

goods like environmental amenities (Chiam, Alias, Khalid, & Rusli, 2011).
CVM was first developed and introduced to determine the value of hunting in Maine’s
deep wood (Davis, 1963). Davis used a bidding game technique to value the deep woods
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of Maine’s hunting. After he obtained the bids, he used a linear regression model to
explain the bids’ variation as a function of income, area used and other factors. Estimates
of valuation he obtained for hunting using CVM method was the same with the valuation
he had obtained using Travel Cost Method (TCM). The idea about CVM in the economic
valuation of goods and services is based on the utility functions (Chiam et al., 2011).
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This valuation has relationship with the concept of WTP, Willingness-To-Accept (WTA)
compensations, concept of consumer surplus, equivalent and compensating variation.
In estimating valuation using CVM, consumers are asked to make decisions in the
framework of a hypothetical market (Brookshire, Randall, & Stoll, 1980). Thus, setting
up a hypothetical market makes it possible to assess an estimate of how much individual
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consumers would be willing to pay for benefits to be derived from a good or service or
how much he would be WTA for a loss of benefit to be derived from a good or service.
Consumers are asked directly to state their values, and rather not inferring values from
actual choices, as the “revealed preference” methods do (Hanley & Spash, 1994). While
developing CVM, three important components were suggested to enhance the model in
giving reliable estimates ( Davis, 1963). The three components are:
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1. Questions about the socio-economic profiles of the respondents to facilitate
explaining variations in WTP and WTA respectively.
2. Detailed description of goods to be valued, which included hypothetical
circumstances affecting the goods including property right situations, relative
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impact of choices on other goods and services; and
3. The WTP or WTA compensation questions.
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Hypothetical market approach is used in estimating economic value of goods and
services provided by biological or environmental resources where neither markets nor
surrogate markets do exist, from which to derive values of the goods and services.
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Attributes of the environmental goods and or services are described to the potential
consumer, while their preference and payment vehicle are elicited. Their WTP to obtain
the good and or service valued or WTA compensation to forgo the object and or service
is obtained directly via personal interview of potential consumers (Davis, 1963).
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WTP and or WTA compensation inquiries can be derived in several techniques. Potential
consumers could be asked to state their maximum WTP so as to have a go ahead in the
improvement of the environment or to prevent deterioration in environmental quality
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from occurring. Potential consumers could also be asked to state the minimum WTA to
put up with deterioration or to go without an improvement. First method is achieved by
using the bidding game in which higher and higher amounts are suggested to potential
consumer until the maximum WTP is reached. Second technique uses a closed-ended
referendum method where potential consumer either agrees or disagrees to a single
payment suggested. The third technique enquires a method where a range of values is
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presented on a card indicating possible typical expenditure by respondents in a given

range of income group on their publicly provided services. The last technique requires
an open-ended method where individuals are asked for their maximum WTP with no
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values being suggested to them (Mitchell & Carson, 1989).
Lots of local studies were conducted to value WTP in recreation using CVM. The open
bidding technique was used to estimate the maximum value users are willing to pay for
the longest world canopy walkways in Taman Negara Kuala Tahan (Suryani, 1999). The
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closed-ended referendum techniques in which a single payment was suggested and

respondents either agree or disagree (yes/no reply) were used at Kampong Kuantan
Fireflies Recreation Center by Jamal (1997) and at Telok Bahang Recreation Forest by
Tan (1998) respectively.
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WTP at the Turtle Island Park, Sabah and at the Taman Taman Rekreasi Sultan Abdul
Aziz (Sultan Abdul Aziz Recreation Park), Selangor were estimated using the open-
ended and the closed-ended techniques by Boni (1997) and Lau (1997) respectively.
While the application of CVM is limited to goods and or services not traded in the
markets, most researchers consider its use as the most appropriate choice for measuring
food safety. Although, there are many other economic tools that can be used to estimate
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non-market goods, such as the TCM, and HP (Buzby, Ready, & Skees, 1995).
3.5.6.1 Bias in Contingent Valuation Method (CVM)
CVM has an advantage over other techniques of valuation in its capability to estimate
non-user values. This method enables an individual to capture the option and existence
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values of an environmental resource as long as respondents understood the questions put
to them by the researcher and they answer truthfully. The dollar values presented directly
to show the value of the environment to the respondents can also be determined using
this technique or method (Mohd-Shahwahid & McNally, 2001).
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CVM is widely used for estimating total economic values, with all types of non-use, or
passive use values, while the methodology of its application should be put to
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consideration as it is based on assumption of the economic rationality of consumers.
Issues of its methodology are divided into three categories as follows:
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i. Reliability
ii. Validity
iii. Bias
Reliability means the consistency in CVM estimate upon repeatability. Valuation

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estimates are replicated by running the technique under exactly the same condition or
situation. This geared to ensure reliability of the estimated value. Validity is a measure
of the degree to which evaluation estimates from CVM correctly indicate the “true”
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valuation of the goods and or services.
A number of researchers aforetime have indicated similar problems in the literature as it

concerns methodological issues in relation to CVM estimation. These related problems
are involved as issues of bias, which commonly lead to low validity. Bias that affect the
CVM are grouped into strategic bias, information bias, the hypothetical bias and part-
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whole bias (Smith, Desvousges, & Fisher, 1986). Turner, Bateman, and Pearce (2001)
considered aggregation and interviewer bias as a procedural bias while starting point and
payment vehicle bias considered classified as instrument bias. In this study, the CVM
was used to determine respondents’ percentage WTP by bid value towards organic rice.
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3.6 Summary
This chapter explains the methodology of how the research was conducted and the
analysis used. Six different analyses were employed in the study. They were: (i)
Descriptive analysis to summarize the profile of respondents, (ii) Cross-tabulation
technique using chi-square analysis was used to describe the association or relationship
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between awareness and respondents’ socio-demographic characteristics, (iii) Point-
biserial correlation (rpb) was used to estimate the relationship between respondent’s
knowledge and awareness towards organic rice and their plan to consume organic rice in
the future if readily available in the market, (iv) Factor analysis was used to reduce the
large number of variables involved to a smaller set of factors, (v) Binary logistic
regression to determine the extent to which selected socio-demographic characteristics
would predict consumers’ WTP or nWTP towards organic rice, and (vi) CVM to
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determine consumers’ percentage WTP by bid value towards organic rice.
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CHAPTER FOUR
RESULTS AND DISCUSSION
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This chapter presents the result from 834 respondents surveyed by fielding answers to
the structured questionnaire used in the study. Descriptive analysis provides information
on the frequency distribution and percentages of respondents’ socio-demographic
characteristic, their awareness, perception, attitude and WTP toward organic rice. Cross-
tabulation technique using chi-square analysis was used to show relationship between
consumers’ awareness and their socio-demographic characteristics.
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Point biserial Pearson Correlation (rpb) was used to estimate the magnitude and direction
of association between respondents’ knowledge and awareness toward organic rice and
their plan to consume organic rice in the future if readily available in the market. The
discussion on factors that influenced the purchase of organic rice using factor analysis
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will also be covered in this chapter. The last section will discuss in details about the
results of binary logistic regression analysis and CVM.
4.1 Descriptive Analysis

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Descriptive analysis using percentages and frequency distribution were used to present
result of respondents’ socio-demographic profile, awareness, perception and attitude
toward organic rice.
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4.1.1 Socio-demographic Profile of Respondents
This section gives a brief description of the demographic characteristics of the target
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population. In Klang Valley, respondents were asked questions about their age, gender,
race, religion, household size, number of family members that are 21years and above,
monthly household income, level of education, occupation and about their marital status.
From Table 4.1, majority of the respondents are below the age of 30 (38.1%) followed
by ages 30-39 years (31.4%) while age 60 years (3.0%) and above are the least. The
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sample respondents are 417 (50%) for both males and females respectively. For race, the
highest number of respondents captured in the study is Chinese 415 (49.8%), followed
by Malays 304 (36.5%), Indians 85 (10.2%), while other races accounted for 30 (3.6%)
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of the total sample. Majority of the sample respondents’ religion is Islam 335 (40.2%),
followed by Buddhism 305 (36.6%), Christianity 143 (17.1%), Hindu 48 (5.8%) while
other type(s) of religion respondents belong to but not mentioned in the questionnaire
accounted for 3 (0.4%).
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Household size is found to influence purchasing decision as the number of members in

the household has effect on the income of consumers (Owusu & Anifori, 2013). The
result in Table 4.1 showed that majority of the respondents 654 (78.4 %) have household
size between one to five. Majority 727 (87.2%) also have one to five family members
that are 21 years and above, 61 (7.3%) have six to ten family members that are 21 years
and above, while 46 (5.5%) of the respondents pointed out that they do not have family
38
members that are 21 years and above. Household monthly income range of RM2001-
4000 is received by 233 (27.9%) of the sample respondents, 215 (25.8%) of the
respondents received RM4001-6000, 169 (20.3%) received RM6001-8000, 158 (18.9%)
received above RM8000, while 59 (7.1%) received RM2,000 and below.
Majority of the respondents 634 (76.0%) had university education, about 160 (19.2%)
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already completed secondary education, 29 (3.5%) had only primary education, while 11
(1.3%) had never gone to school before. The occupation in this study is divided into five
sections. Majority of the respondents 420 (50.4%) worked in the private sector, 181
(21.7%) worked in the public sector, 166 (19.9%) are self-employed, 23 (2.8%) are house
wives, while 44 (5.3%) worked in other sectors.
It is important to note that occupation reveals the socio-economic status of individuals,
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which could help to reflect behavioural pattern toward purchases, especially in marketing
study. More so, income and occupation have related influence on behavioural pattern
toward purchases as both are likely to positively affect purchases. Majority 468 (56.1%)
of the respondents were married, 331 (39.7%) were single, while 24 (2.9%) and 11
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(1.3%) were divorced and widow/widower respectively.
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Table 4.1: Socio-demographic Profiles of Respondents
Characteristics Frequency (n) Percentage (%)
Age (years)
20-29 318 38.1
30-39 262 31.4
40-49 147 17.6
50-59 82 9.8
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≥60 25 3.0
Gender
Male 417 50.0
Female 417 50.0
Race
Malay 304 36.5
Chinese 415 49.8
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Indian 85 10.2
Others 30 3.6
Religion
Islam 335 40.2
Buddhism 305 36.6
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Hindu 48 5.8
Christianity 143 17.1
Others 3 0.4
Household size
1-5
˃5
No. of family members≥21yrs
H 654
180
78.4
21.6
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1-5 727 87.2
6-10 61 7.3
Nil 46 5.5
Household income (RM)
2000 & Below 59 7.1
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2001-4000 233 27.9

4001-6000 215 25.8
6001-8000 169 20.3
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8001-10000 91 10.9
10001-12000 30 3.6
>12000 37 4.4
Education
Never been to school 11 1.3
Primary 29 3.5
Secondary 160 19.2
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College/University 634 76.0

Occupation
Public sector 181 21.7
Private sector 420 50.4
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Self-employed 166 19.9

House wife 23 2.8
Others 44 5.3
Marital status
Single 331 39.7
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Married 468 56.1

Divorced 24 2.9
Widow/Widower 11 1.3
Source: Field survey (2014)
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4.1.2 Awareness and Attitude Analysis
The frequency analysis results of respondents' awareness and attitude toward organic rice
were presented in Table 4.2. For respondents’ awareness towards organic rice, about
47.8% (399) of the respondents had heard about organic rice but know a little, 24.6%
(205) had heard about it but not sure, 10.4% (87) know about organic rice very well and
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those that had never heard about organic rice were 17.1% (143).
The result revealed that majority of the respondents 82.9% (691) in this study had heard
about organic rice with varying levels of knowledge and awareness. This finding is
similar to the studies of Cerna (2010), who reported that about 64% respondents have at
least heard of the word organic rice. Ara (2003) also reported that about half of his
respondents in Manila at least had heard of the word organic rice before. This in general,
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may imply that higher percentages of people are aware at least of the word organic rice.
Information source about organic rice is vital to impact on consumption or purchases.

From the study, it is shown that friends and acquaintances 285 (34.2%) were the main
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sources of information about organic rice to the respondents as shown in Table 4.2. This
is similar to the findings of Akbari & Asadi, 2008) that reported friends as been part of
the source of information channel through which consumers heard about organic food.
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Family member 213 (25.5%) was the second source of information followed by
electronic media 212 (25.4%), print media 188 (22.5%), social media 72(8.6%) and
others 37(4.4%).
IG
R
PY
O
C
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41
Table 4.2: Respondents’ Awareness and Attitude toward Organic Rice
Statements Frequency Percentage
Awareness towards Organic Rice
Heard about but know a little 399 47.8
Heard about but not sure 205 24.6
Never heard about 143 17.1
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Know about it very well 87 10.4
Source of Information towards Organic Rice
Friends & Acquaintances 285 34.2
Family members 213 25.5
Electronic media 212 25.4
Print media 188 22.5
Social media 72 8.6
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Others 37 4.4
Do you ever Consumed/Purchased Organic
Rice 617 74.0
No 217 26.0
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Yes
Reasons for Consuming Organic Rice
Health concern 176 21.1
Nutritious
Food safety
Environmental concern H 138
124
64
16.5
14.9
7.7
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Tasty 11 1.3
Others 7 0.8
Frequency of Consuming Organic Rice
Nil 617 74.0
Occasionally 144 17.3
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Frequently 73 8.8
Who Influences Your Choice for Consuming
Parents/Family members 107 12.8
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Self 78 9.4
Friends 46 5.5
Husband/Wife 40 4.8
Children 11 1.3
Others 9 1.1
Reasons for not Purchasing Organic Rice
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Expensive 264 31.7

Do not know about Organic Rice 252 30.2
Do not know where to get it 235 28.2
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Organic Rice difficult to get in the 119 14.3

market 46 5.5
Do not like Organic Rice 21 2.5
Others
Plan to Purchase Organic Rice in Future
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Yes 576 69.1

No 258 30.9
42
Others here referred to other sources of information mentioned by the respondents in the
course of the survey such as getting information about organic rice from journals, during
promotions at shopping malls, information written on organic rice packets at shopping
malls and others.
In the table, it was revealed that majority of respondents 617 (74.0%) indicated they have
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not consumed organic rice before. Those respondents 217 (26.0%) that said they had
consumed organic rice before indicated health concern 176 (21.1%) as a major reason
for consumption. This is followed by nutritious 138 (16.5%), food safety 124 (14.9%),
environmental concern 64 (7.7%), tasty 11(1.3%) and others 7 (0.8%). There are several
reasons as to why respondents have not consumed organic rice before as indicated in
Table 4.2. The major reason given was that it is expensive 264 (31.7%). This is in contrast
with the findings of Aryal et al., (2009) where they reported that despite consumer’s
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perception that organic products were expensive, they continued to buy.
Other reasons given by respondents were that they do not know about organic rice 252
(30.2%), they do not know where to get it 235 (28.2%), some said organic rice is difficult
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to get in the market 119 (14.3%), some stated that they do not like organic rice 46 (5.5%)
and others 21 (2.5%). However, about 576 (69.1%) had planned to consume or purchase
organic rice in future if readily available. As shown in Table 4.2, of the 217 respondents
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that had consumed organic rice before, 144 (17.3%) and 73 (8.8%) consumes it
occasionally and frequently respectively. From Table 4.2, it is also shown that choice for
consuming organic rice was influenced majorly by parents 107 (12.8%), followed by self
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78 (9.4%), friends 46 (5.5%), husband/wife 40 (4.8%), children 11(1.3%) and others 9
(1.1%) respectively.
Table 4.3 used descriptive statistics with crosstab analysis to show the relationship
between consumers’ awareness towards organic rice and their socio-demographic
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characteristics. The result from crosstab analysis revealed that majority of the
respondents 318 (38.1%) were between ages 20-29 years. From this group of respondents
(318), most (161) of them indicated they have heard but know a little of organic rice.
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From this result, it is suggested that the younger generation is more concerned about
safer, environmental friendly and healthier food such as organic rice. This finding is
supported by the work of Stevens-Garmon, Huang and Lin (2007) whose study showed
the younger are more concerned about organic food and more willing to pay for the
consumption of organic food. On the contrary, in the work of Sangkumchaliang and
Huang (2012), they found out that older consumers above 35 years of age were more
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desirous to buy organic food products.
In terms of gender, the respondents were 417 (50%) each for the males and females
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respectively. More males (93) than females (50) claimed they have never heard about
organic rice, while more females (52) than males (35) claimed to know very well about
organic rice. These results are supported by the findings that females are more
knowledgeable than males in all areas of nutrition knowledge (Parmenter, Waller, &
Wardle, 2000). For race, of the 143 (17.1%) that said they have never heard about organic
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rice, 74 were Chinese, 42 Malays, 19 Indians, while eight respondents belong to other
races. Of the 87 (10.4%) that claimed to know organic rice very well, 46 were Chinese,
35 Malays, two Indians and four belong to other races. The study also showed that 187
Chinese, 153 Malays, 42 Indians and 17 respondents from other races have heard but
know a little about organic rice. Those that have heard about organic rice but not sure
were Chinese (108), Malays (74), Indians (22) and one respondent from other race.
43
Table 4.3: Consumers’ Awareness towards Organic Rice and their Socio-
demographic Characteristics (n=834)
Heard Heard
Socio- Never about it about it Know Total
Demographic heard but not but know very well
sure little
PM
N % n % n % n % n %
Age
20-29* 47 32.9 82 40.0 161 40.4 28 32.2 318 38.1
30-39 53 37.1 66 32.2 116 29.1 27 31.0 262 31.4
40-49 27 18.9 33 16.1 74 18.5 13 14.9 147 17.6
50-59 14 9.8 20 9.8 35 8.8 13 14.9 82 9.8
>60 2 1.4 4 2.0 13 3.3 6 6.9 25 3.0
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Gender
Male 93 65.0 95 46.3 194 48.6 35 40.2 417 50.0
Female 50 35.0 110 53.7 205 51.4 52 59.8 417 50.0
Race
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Malay* 42 29.4 74 36.1 153 38.3 35 40.2 304 36.5
Chinese 74 51.7 108 52.7 187 46.9 46 52.9 415 49.8
Indian 19 13.3 22 10.7 42 10.5 2 2.3 85 10.2
Others
Education
No schooling*
8
2
5.6
1.4
1
3 H0.5
1.5
17
4
4.3
1.0
4
2
4.6
2.3
30
11
3.6
1.3
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Primary school 5 3.5 9 4.4 10 2.5 5 5.7 29 3.5
Secondary 41 28.7 41 20.0 69 17.3 9 10.3 160 19.2
school 95 66.4 152 74.1 316 79.2 71 81.6 634 76.0
University
Income
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≤2,000* 12 8.4 16 7.8 28 7.0 3 3.4 59 7.1

2,100-4,000 40 28.0 61 29.8 108 27.1 24 27.6 233 27.9
4,100-6,000 32 22.4 61 29.8 106 26.6 16 18.4 215 25.8
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6,100-8,000 32 22.4 30 14.6 81 20.3 26 29.9 169 20.3

8,100-10,000 16 11.2 26 12.7 40 10.0 9 10.3 91 10.9
10,001-12,000 6 4.2 6 2.9 14 3.5 4 4.6 30 3.6
˃12,000 5 3.5 5 2.4 22 5.5 5 5.7 37 4.4
NOTE: * An asterisk refers to the reference category that was hidden in the binary
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logistic analysis in Table 4.18.

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As regards to education, majority of the respondents 316 (79.2%) that said they have
heard about but know a little of organic rice had university education, 69 had secondary
education, ten with primary education while only four never went to school. 95 of the
143 respondents that never heard about organic rice had university education. Of the 87
respondents that claimed to know organic rice very well, 71 had university education,
©
nine had secondary education, five had primary education while two never went to
school.
44
As regards to income, the table showed that out of 87 respondents that claimed to know
about organic rice very well, 26 earned between RM6,001-8,000, 24 received RM2,100-
4,000, 16 of the respondents received RM4,100-6,000, about five received above
RM12,000 in the income category, while only three received less than RM2,000. Of the
143 respondents that claimed they have never heard about organic rice, 40 respondents
received RM2,100-4,000, 32 received income categories RM4,100-6,000 and RM6,100-
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8,000 respectively, five received more than RM12,000 while 12 of the respondents
received less than or equal to RM2,000 per month.
Chi-square analysis indicated that some of the socio-demographic profiles showed

significant relationship with awareness of respondents toward organic rice in terms of
information and knowledge about organic rice. In Table 4.4, the result showed that three
out of five variables have a statistical significant relationship with awareness at 5 percent
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significant level (α= 0.05). These three variables are gender (p= 0.001), race (p= 0.029)
and education (p= 0.040). This indicates that there is a significant interaction between
gender and awareness, race and awareness, and education and awareness respectively.
Thus implies that awareness is significantly dependent on gender, race and education of
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the respondents. For gender, the result suggests the choice of male or female consumers’
influence awareness towards organic rice, which was indicated in the descriptive analysis
that females were more aware about organic rice than male consumers in Malaysia.
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Table 4.4: Relationship between Respondents’ Awareness towards Organic Rice
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and their Socio-demographic Characteristics
Socio-Demographic χ2 Df Significant Decision
Age 14.928a 12 0.245 Fail to Reject H0
a
Gender 17.653 3 0.001** Reject H0
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Race 18.604a 9 0.029** Reject H0

Income 18.884a 18 0.399 Fail to Reject H0
Education 17.616a 9 0.040** Reject H0
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Note: **Significant at 5% level of significance

Source: Field Survey (2014)
This finding is supported by Altarawneh (2013) and Olivas and Bernabeu (2012) in their
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work identified that females are comparatively more aware than males about organic
food product consumption. Contrary to this finding, Kumar and Ali (2011) in their study
indicated that males are comparatively more aware than females toward organic food
consumption.
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As regards to race, the Chinese consumers were comparatively more aware than other
races in Malaysia about organic rice. This finding is supported by Stanton et al., (2011)
that discovered 80% of the Malaysian Chinese were aware of organic food products while
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being concerned of toxins, pesticides and inorganic fertilizer presence in food products.
As regards to education, respondents with university education were more aware of
organic rice as compared to respondents with the other levels of education. As reported
by Kumar and Ali (2011), education strongly and significantly affect consumers’
awareness toward organic products. Sangkumchaliang and Huang (2012) also reported
45
education as a significant factor affecting awareness towards organic food products.
Their findings support the result of this study.
Figure 4.1 showed a crosstab analysis of the relationship between consumers’ plan to
consume organic rice in the future and their level of awareness. From the total
respondents of 834 studied, majority 576 (69.1%) of them planned to consume organic
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rice in the future. Of the 143 respondents that said they have never heard about organic
rice, 83 planned to consume organic rice in future. Out of 87 respondents that claimed
they know organic rice very well, 60 planned to consume organic rice in future.
This result suggests that not all respondents despite their awareness of organic rice were
willing to purchase it. Briz and Ward (2009), reported that awareness about organic food
does not necessarily translate into actual consumption, which supports the finding of the
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study. More so, of the 205 that had heard but not sure about organic rice, 146 were willing
to purchase organic rice in future. Out of 399 respondents that had heard but know a little
about organic rice, 287 planned to consume organic rice in future.
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Know very well (87)
H 60
IG
Heard but know a little
287
(399)
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Awareness
levels
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Heard but not sure (205) 146
Never heard (143) 83

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Frequencies of Respondents that planned to consume

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Organic rice
Figure 4.1: Crosstab between Awareness and Plan to Consume Organic Rice in
the future (n=834)
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46
The Pearson chi-square result (p=0.018) showed respondents plan to consume organic
rice in future is significantly dependent on their awareness towards organic rice at 5
percent level of significance (Table 4.5). This could suggest that the higher awareness of
consumers toward organic rice, they become more knowledgeable thus influencing their
decision to purchase or consume organic rice. This is supported by Raab and Grobe
(2005). They reported that higher awareness leads to consumers becoming more
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knowledgeable thus influencing consumption of organic food. In contrast, Briz and Ward
(2009) found out that awareness will not at all time lead to consumers’ purchase.
Table 4.5: Pearson Chi-square Test for the Relationship between Awareness and
Plan to Consume Organic Rice in the Future
Asymp. Sig.
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Value df
(2-sided)
Pearson chi-square 10.111a 3 0.018
Likelihood ratio 9.722 3 0.021
Linear-by-linear
5.108 1 0.024
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Association
N of Valid cases 834
H
IG
Point biserial (rpb) correlation was used in the study to get further insight into the
association or relationship between respondents’ awareness towards organic rice and
their plan to consume organic rice in future. Table 4.6 showed the relationship between
these variables with only one of the relationships statistically significant at one percent
significant level. The result showed a statistical significant relationship between “never
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heard” and “plan to consume” organic rice in the future as the significant p-value (0.002)
is less than α= 0.01. This implies association between the two variables has a 99 percent
confidence that it is not due to chance and therefore is likely to be a reliable and true
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relationship.
Table 4.6: Correlation between Awareness towards Organic Rice and Plan to
Consume in the Future
Awareness r-value Sig-value
O
Never heard -0.108** 0.002

Heard about but not sure 0.027 0.443
Heard about but know a little 0.059 0.087
C
Know very well 0.000 0.983

Note: **Significant at 1% level of significance
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Hinkle, Wiersma and Jurs (2003) demonstrated in the rule of thumb for interpreting size
of correlation coefficient, that .00 to .30 and .00 to -.30 are interpreted as little or very
weak correlation. The result showed the Point biserial (rpb) correlation coefficient (r = -
0.108) indicates there is a little negative correlation (weak negative relationship) between
the variables “never heard” about organic rice and “plan to consume” organic rice in
47
future. This means as the value for “never heard” increases (lack of awareness), value for
consumption decreases. This could be implied as the more the respondents do not have
awareness (never heard about organic rice) towards organic rice, the more they would
likely not plan to consume organic rice in future. This could be interpreted further that
the more respondents become aware about organic rice, the more they would plan to
consume organic rice in the future. This finding is supported by Shah and Jain (2012)
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that found a significant positive relationship between consumption plan for functional
foods and awareness level.
4.1.3 Perception Analysis
The perception of consumers toward a product affect their decision making process
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towards using or not using the product. Perception has to do with the mental awareness
of consumers toward a product, which is affected by internal as well as external stimuli
such as social, cultural, economic and environmental influences (Radam, Yacob, Bee, &
Selamat, 2010). The frequency analysis of respondents’ perception is summarized in
T
Table 4.7.
Most of the respondents perceived organic rice was healthier 568 (68.1%) to consume
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than conventional rice. The respondents that perceived organic rice was more expensive
were 442 (53.0%), followed by 430 (51.6%) that perceived it is safer to consume, next
286 (34.3%) perceived it is environmental friendly, 201 (24.1%) perceived it contains
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more nutrients. About 76 (9.1%) of the respondents perceived it is similar to conventional
rice, 65 (7.8%) perceived it tastes better than conventional rice, 32 (3.8%) perceived it is
more attractive than conventional rice. Others 13 (1.6%) were the respondents that had
certain forms of perceptions about organic rice which was not captured in the
questionnaire.
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Table 4.7: Respondents’ Perception towards Organic Rice

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Statements Frequency Percentages
Healthier 568 68.1

More expensive 442 53.0
Safer to consume 430 51.6
Environmentally friendly 286 34.3
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Contains more nutrients 201 24.1

Similar to conventional rice 76 9.1
Tastes better 65 7.8
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Attractive 32 3.8
Others 13 1.6
The result in Table 4.8a and Table 4.8b indicates that the order of importance in the
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factors influencing consumers' perception towards organic rice and conventional rice is
somewhat dissimilar. The result indicates price as the most important factor influencing
consumers’ perception towards organic rice. The second in the order of important factors
in consumers’ perception towards organic rice is health concern and side effects followed
by nutritious, food safety, and certification. Others are in the order of importance
48
consisting of processing, labelling, environment, taste, knowledge, availability, sensory
characteristics, packaging and animal welfare respectively.
Table 4.8a: Respondents’ Perception towards Organic rice

Perception Mean Rank
PM
Price 4.46 1
Health concerns 4.42 2
Nutritious 4.41 3
Food safety 4.40 4
Certification 4.38 5
Processing 4.29 6
Labelling 4.28 7
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Environment 4.27 8
Taste 4.26 9
Knowledge 4.25 10
Availability 4.21 11
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Sensory 4.17 12
Packaging 4.05 13
Animal welfare 2.86 14
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NOTE: 1 Very important; 2 Unimportant; 3 Neutral; 4 Important; 5 Very important
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Meanwhile, price was also ranked as the most important factor influencing consumer’s
perception towards conventional rice. Other factors in order of importance are
availability, nutritious, food safety, taste, health concerns, and processing. This is
followed by labelling, certification, sensory characteristics, knowledge, environment,
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packaging and animal welfare respectively.

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Table 4.8b: Respondents’ Perception towards Conventional rice

Perception Mean Rank
Price 4.24 1
Availability 4.17 2
Nutritious 4.16 3
Food safety 4.15 4
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Taste 4.14 5
Health concerns 4.13 6
Processing 4.07 7
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Labelling 4.06 8
Certification 4.05 9
Sensory 4.04 10
Knowledge 4.02 11
Environment 3.96 12
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Packaging 3.90 13
Animal welfare 3.82 14
NOTE: 1 Very important; 2 Unimportant; 3 Neutral; 4 Important; 5 Very important
49
A summary of consumers' perception towards organic rice is shown in Table 4.9. For
meaningful and easy analysis, the study focused on different aspects of respondents’
perception towards organic rice. Looking at the mean values from Table 4.9, it is found
that most of the respondents perceived health benefit as a very important factor
influencing their purchase of organic rice with the mean value of 1.87. This is followed
by their perception that organic rice needs be certified to guarantee that it is produced
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and processed in the right way with a mean value of 1.92. From the result of the study
(Table 4.9), it showed respondents were also concerned that organic rice needs be
labelled to guarantee it is free from chemicals with a mean value of 1.94. Next in their
perception was that consumers lack knowledge about organic rice. This has a mean value
of 1.97. This was followed by their perception that perceived and product attributes
influence consumers to purchase organic rice with mean values of 2.01 and 2.02
respectively.
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T
H
IG
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O
C
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50
Table 4.9: Summary of Consumer’s Perception towards Organic Rice
Statements Mean Rank
Similar to conventional rice 3.44 33
Better than conventional rice 2.27 20
Tastier than conventional rice 2.86 29
Trendy/Fashionable to buy organic rice 3.29 32
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Organic rice safer to consume 2.21 17
Organic rice has no chemical residue effect 2.20 16
Production of organic rice prevents environmental pollution 2.09 12
Chemical residue in conventional rice due to excessive use of 2.21 17
chemicals
Organic fertilizer in & biological control organic rice production 2.07 9
are very good
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Consumers lack knowledge about organic rice 1.97 4
Consumers’ educational level important in purchasing organic 2.43 23
rice
Consumers’ income level is important in purchasing organic rice 2.24 19
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Family influence is important in purchasing organic rice 2.15 14
Health benefit is considered very important factor by consumers 1.87 1
when purchasing organic rice
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Product attributes influence consumers to purchase organic rice
Perceived attributes influence consumers to purchase organic rice
Organic rice has huge market potential in Malaysia
2.02
2.01
2.73
6
5
26
IG
Organic rice has huge market potential in Klang Valley 2.73 26
Organic rice is easy to buy in the market in Malaysia 2.95 31
Organic rice is easy to buy in the market in Klang Valley 2.93 30
Organic rice is only suitable to be sold in supermarkets 2.95 31
Consumers willing to purchase organic rice if price is similar to 2.03 8
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conventional rice
Consumers will purchase organic rice if they have no choice 2.27 20
Campaign to consume organic rice need be done by the 2.12 13
PY
government
Information about organic rice must be disseminated by both 2.02 6
Private and Government Institutions
Government has to control the price of organic rice in the market 2.08 10
Government has to give subsidy to producers of organic rice to 2.08 10
reduce the price of organic rice
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Advertisements about benefits of organic rice is easy to get on 2.77 28

print media and social media respectively
No need to conduct advertisement on organic rice 3.68 34
C
I will consume organic rice after this survey 2.69 25

Packaging an factor in consuming/purchasing organic rice 2.44 24
Packaging material an important factor in purchasing organic rice 2.40 22
Organic rice needs be labelled to guarantee it is free from 1.94 3
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chemicals
Organic rice needs be certified to guarantee it is produced & 1.92 2
processed in right way
NOTE: 1 Strongly agree; 2 Agree; 3 Neutral; 4 Disagree; 5 Strongly disagree
51
By referring to Table 4.9, the respondents' main perception towards organic rice can be
seen. Most of them do not agree that there is no need to conduct advertisement on organic
rice. The respondents also do not agree that organic rice is similar to conventional rice.
The respondents also do not agree to the statement that organic rice is easy to buy in the
market in Klang Valley and Malaysia as a whole. They likewise indicated they do not
agree to the statement that organic rice is only suitable to be sold in supermarkets.
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4.2 Factor Analysis
Factor analysis is a multivariate statistical technique used to identify relationship

between large number of variables or items and then grouping these variables or items
into smaller set of components or factors. This analysis involves three major steps; first,
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determining the appropriateness or suitability of the data for factor analysis. Secondly,
determining the smallest number of factors or dimensions that best represent the inter-
correlations among the set of variables (factor extraction) and thirdly, rotating and
interpretation of the retained factors. Principal component analysis was used to extract
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the factors or dimensions while the varimax rotation used to ensure easier interpretation
of result by providing a pattern of factor loadings easier to interpret.
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4.2.1 Measure of Sampling Adequacy and Correlation Matrix Significance
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Exploratory Factor Analysis (EFA) was conducted using Principal Component Analysis
(PCA) geared towards displaying the factors influencing the purchase of organic rice
with orthogonal rotation (varimax). The orthogonal rotation approach (varimax) was
used as it produced results easier to interpret (Tabachnick & Fidell, 2007). Principal
Component Analysis (PCA) was conducted on the 34 variables or items related to the
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factors influencing consumers’ perceived demand for organic rice.
The Kaiser-Meyer-Olkin (KMO) test was used to measure the sampling adequacy. This
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is based on the correlation and partial correlation index value, which ranges from 0 to 1.
The Bartlett’s test of sphericity used to measure the inter-relationship or correlation
among the variables involved. These statistics are used to assess the factorability of the
items or variables. According to Hutcheson and Sofroniou (1999), KMO measure of 0.5-
0.7 is considered “moderate”, 0.7-0.8 considered “good”, 0.8-0.9 and > 0.9 are
considered ”very good” and “excellent” respectively.
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The result in Table 4.10 showed the Bartlett’s test of sphericity χ² (136) = 10836.286, p<
0.05 for this data was significant (p=0.000), implying correlation between items were
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sufficiently large for Principal Component Analysis (PCA). This indicates that it is
appropriate to conduct factor analysis. The Kaiser-Mayer-Olkin (KMO) test was 0.891
meaning that the sampling adequacy was excellent, implying an excellent inter-
correlation between the factors. This finding is supported by Tabachnick and Fidell
(2007), where they stated that Bartlett test of sphericity must be significant (p< 0.05) for
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factor analysis to be considered appropriate and also suggested a minimum index value
of 0.6 for Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy value for a good
factor analysis.
52
Table 4.10: Reliability, Kaiser Meyer-Olkin (KMO) & Bartlett’s Test
Cronbach’s alpha (No of items= 34) 0.931
Kaiser-Mayer-Olkin 0.891
Measure of Sampling Adequacy.
Bartlett’s Test of Sphericity Approx. Chi-Square 10836.286
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Df 136
Sig. 0.000
4.2.2 Communality
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The total variance for a particular variable in the R-matrix will have two components.
Some of the variance will be shared with other measures or variables while some of it
will be specific to that variable or measure. The variance shared is called common
variance while the variance specific to the variable that is not shared is called unique
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variance. Random or error variance is also specific or attributed to one measure but not
reliably attributed. The proportion of common variance present in a variable is known as
communality. Communality is the total amount of variance an original variable shares
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with all other variables included in the analysis (Hair, Black, Babin, & Anderson, 2010).
When a variable has no unique or random variance, it would have a communality of one.
When the variable shares none of its variance with any other variable, it would have a
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communality of 0.
When conducting factor analysis, the interest is in determining common underlying

dimensions within the constructs or data. This implies the interest is primarily only in the
common variance. Hence, it is desired to determine how much of the variance present in
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our data is common variance. Tabachnick and Fidell (2007) recommends strength of
inter-item correlation in the correlation matrix as r > 0.3. Hence, variables or items with
communalities less than 0.3 were eliminated. Table 4.11 showed the communalities for
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items in the factor analysis done for the study.

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Table 4.11 Communalities for Items
No Variables Communality
1 Organic rice safer to consume compared to conventional rice 0.684
2 Organic rice has no chemical residue side effects 0.759
3 Production of organic rice is good because it prevents
0.814
environmental pollution
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4 Chemical residue in conventional rice are due to the excessive
0.697
use of chemicals
5 Use of organic fertilizer and biological control in organic rice
0.668
production are very good
6 Organic rice has a huge market potential in Malaysia 0.697
7 Organic rice has a huge market potential in Klang valley 0.718
8 Organic rice is easy to buy in the market in Malaysia 0.724
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9 Organic rice is easy to buy in the market in Klang valley 0.713
10 Campaign to consume organic rice need be done by the
0.744
Government
11 Information about organic rice must be disseminated by both
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0.799
the Private and Government institutions
12 Government has to control price of organic rice in the market 0.811
13 Government to give subsidy to producers of organic rice to
reduce price of organic rice
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14 Packaging an important factor in consuming/purchasing
organic rice
0.750
0.903
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15 Packaging material (paper, cardboards, glass) important factor
0.894
in purchasing organic rice
16 Organic rice needs to be labelled to guarantee it is free from
0.712
chemicals
17 Organic rice needs to be certified to guarantee it is produced &
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0.722
processed in the right way
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4.2.3 Varimax Normalization
The variables considered in this study were rotated using the orthogonal varimax rotation
method. This was done as the rotation will produce pattern of the factor loadings that is
easier to interpret by redistributing the variance in the right way to achieve clearer and
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simpler separation of factors. Generally, factor pattern obtained by varimax rotation tend
to be more invariant when different subsets of variables are analysed (Hair et al., 2010).
The major advantage of varimax normalization is that the total eigenvalue and the
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percentage of the total variance of the principal components have not been affected. This
is because the mathematical relationship of the key factors remains stable since the
rotation does not change the angle of each factor.
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According to the results of the rotated factor matrix, only items with factor loadings
greater than 0.5 were considered as significant items in interpreting the factors. This
study identified four latent factors influencing purchase of organic rice. The factor
loadings for the four factors were in the range 0.680 to 0.889. The factors were labelled
based on the sub-variables, which were found in each factor.
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4.2.4 Eigenvalue Criteria
Eigenvalue is the column sum of squared loadings for a factor, which represents the
amount of variance accounted for by a factor (Hair et al., 2010). It is also referred to as
latent roots or characteristic roots. In this study, the Principal Component Analysis (PCA)
in the data extraction performed four factors namely: Institutional Intervention,
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Knowledge and Awareness, Market, and Packaging. These four factors have eigenvalue
greater than one and the total variance explained was 75.347 percent as showed in Table
4.13. Hence, the extracted factors explained a specified amount of variance which is
considered satisfactory.
4.2.5 Variance explained
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The percentage of variance explained is the measurement of factors retained to consider
the total variance accounted for or explained by the factors. Aaker, Kumar, and Day
(1998) revealed that the variance explained is a summary of measures indicating how
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much of the total original variance of all the variables that the factor represents. The
percentage of variance explained statistics can be useful in evaluating and interpreting a
factor. The total cumulative variance accounts for 75.347 percent. The amount of
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variance explained by each of the four factors is showed in Table 4.12.
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Table 4.12: Result of Variance Explained
Factors Variance (Percentage Explained)
Institutional Intervention 45.637
Knowledge and Awareness 14.052
Market 8.589
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Packaging 7.069
Total 75.347
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4.2.6 Factors affecting the Purchase of Organic Rice
There are two techniques commonly used in determining the number of factors. They are
the Kaiser’s criterion and Cattell’s scree plot test. Analysis was conducted to determine
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eigenvalues for each of the component in the data. Four component factors were
identified to be extracted in the exploratory analysis, which in combination explained a
cumulative of 75.347 percent of the variance (Table 4.13). Therefore, the factor solution
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in the data reduction mechanism goes with an information loss of about 24.653 percent.
As shown in Table 4.13, 17 statements or items were extracted along with their factor
loadings. Four factors were identified from these 17 items as well as their factor loadings,
eigenvalues and variance. The factor loadings of the un-eliminated statements in this
study were in the range of 0.680 to 0.889.
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Accordingly, Factor 1 was labelled as Institutional Intervention with six significant

variables underlying the same factor or component, accounting for 45.637 percent of the
variance with an eigenvalue of 7.7580. These six variables or items were concerned with
both Private and Government organizational intervention. This implied that their
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interventions on subsidy, price control, information dissemination, ensuring guarantee
system in product labelling, product certification, sensitization and campaign toward
advertisement of organic rice consumption suggest concerns by the respondents as
important in influencing their purchase decision towards organic rice consumption.
These findings are supported by the work of (Meyer-höfer, Jaik, Bravo, & Spiller, 2013).
In their work, they stated that the interventions of the Government of Chile in the form
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of policies geared toward supporting growth of the organic food sector influences
consumers’ intention towards the purchase of organic food products.
Factor 2 was represented by Knowledge and Awareness as all variables contributing to it

emphasized concerns about awareness and knowledge towards Organic rice
consumption. There are five significant variables in this factor component with an
eigenvalue value of 2.389. The total variance explained by this second factor was 14.052
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percent. The result thus implied that one of the main concerns of the respondents in
purchasing or consuming organic rice was the awareness and information seeking to have
knowledge about organic rice they want to purchase. The finding is supported by
Giannakas (2002) findings, which reported that knowledge and awareness about organic
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food products are very important in the purchase decision of consumers. Cerna (2010) in
his study also found out that awareness influences consumers’ purchase decision towards
organic rice in General Santos city.
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Factor 3 was labelled Market as all variables that accounted for it emphasized market
potential and ease of buying organic rice. This factor consisted of four significant
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variables, which are all positively correlated with an eigenvalue of 1.460, accounting for
8.589 percent of the variance. Purchasing decision of consumers can be influenced when
there is sustainable market with high potential for availability and accessibility to
consumers for the purchase of organic rice. Paul and Rana (2012) identified market
accessibility and availability as having significant influence on consumers’ choice and
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decision processes in purchasing towards organic food products.
Factor 4 was renamed Packaging, which consists of two significant statements. These
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accounted for 7.069 percent of the variance with an eigenvalue of 1.202. From this
finding, it is suggested that the technique of packaging organic rice and the materials
used in the packaging could influence consumers’ purchase intention towards organic
rice. Dickieson and Arkus (2009) in their work found out that appropriate packaging and
presentation of organic food products help in influencing purchase and consumption of
such food products. Their findings support the result in this study.
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From the conceptual framework used for this study, factor 1 (Institutional Intervention),
factor 3 (Market), and factor 4 (Packaging) fall under the Perceived Behavioural Control
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(PBC) while factor 2 (knowledge & Awareness) falls under Attitude. This implies
respondents’ purchase intention towards organic rice were influenced mainly by the PBC
and the attiude they displayed towards organic rice. This result is supported by the
findings of (Hagger et al., 2009). According to Hagger et al., (2009), attitudes and PBC
predicted intention of Estonian school children as physically active in their leisure-time.
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Pouta and Rekola (2001); Werner, Michal, Aharon, and Davidson (2002) in their study
also found PBC to be an important predictor of intention. However according to Sparks
& Shepard (1992), PBC have shown to predict intentions better than attitudinal variables.
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Table 4.13: Factors Influencing Consumers’ Purchasing Intention toward Organic
Rice
Factor loadings
Items F1 F2 F3 F4
Institutional Intervention
Campaign to consume organic rice need be 0.809
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done by the Government
Information about organic rice must be 0.830
disseminated by both the Private and
Government institutions
Government has to control price of organic 0.857
rice in the market
Government to give subsidy to producers of 0.833
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organic rice to reduce price of organic rice
Organic rice needs to be labelled to 0.683
guarantee it is free from chemicals
Organic rice needs to be certified to 0.680
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guarantee it is produced & processed in the
right way
Knowledge & Awareness
conventional rice
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Organic rice safer to consume compare to
Organic rice has no chemical residue side

0.779
0.813
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effects
Production of organic rice is good because 0.831
it prevents environmental pollution
Chemical residue cases in conventional rice 0.738
are due to the excessive use of chemicals
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Use of organic fertilizer and biological 0.722

control in organic rice production are very
good
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Market
Organic rice has a huge market potential in 0.797
Malaysia
Organic rice has a huge market potential in 0.809
Klang valley
Organic rice is easy to buy in the market in 0.847
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Malaysia
Organic rice is easy to buy in the market in 0.830
Klang valley
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Packaging
Packaging an important factor in 0.889
consuming/purchasing organic rice
Packaging material (paper, cardboards, 0.880
glass) important factor in purchasing
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organic rice
Eigenvalue 7.7580 2.389 1.460 1.202
% of variance 45.637 14.052 8.589 7.069
Cumulative % of variance 45.637 59.689 68.278 75.347
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4.2.7 Reliability Analysis
A reliability analysis need be conducted on the factors which have been produced from
the factor analysis before conclusive discussion can be done. Reliability is the extent to
which a measure, item, scale or instrument will yield the same score when administered
in different times, locations, or populations (Corsico, Luzon, & Murillo, 2008). It is a
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measure of the degree of consistency between multiple measurements of a variable
(Mehdi, 2005). Internal consistency is the most commonly used measurement of
reliability. It applies to the consistency among the variables in a summated scale. The
idea for internal consistency is that individual indicators or items of the scale should all
be measuring the same construct and thus highly correlated (Hair et al., 2010).
Cronbach’s alpha was used to measure the reliability of the items to determine the factors
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influencing the purchase of organic rice. This was to ensure the internal consistency of
these 34 items used. In the study, the overall cronbach’s alpha value for all the items is
0.931 as indicated in Table 4.10. This cronbach’s alpha value showed excellent
consistency in the measuring instrument used indicating a very good reliability.
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According to George and Mallery (2003), cronbach’s alpha value greater than 0.9 is
interpreted as very good reliability for an instrument, greater than 0.8 interpreted as good,
greater than 0.7 interpreted as acceptable, greater than 0.6 interpreted as questionable,
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greater than 0.5 and greater than 0.4 interpreted as weak and unacceptable respectively.
Table 4.14 contains the cronbach’s alpha value for all the four factors or components
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extracted in the exploratory analysis. The cronbach’s alpha for the four components
extracted were well above 0.70 (the acceptable index value) ranging in between 0.855 to
0.928. This indicates that all the components or factors extracted from the analysis were
reliably having sufficient internal reliability.
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Table 4.14: Internal Reliability Analysis for the Factors

Factors Cronbach’s Alpha Number of Items
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Organizational Intervention 0.928 6

Knowledge and Awareness 0.903 5
Market 0.855 4
Packaging 0.914 2
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4.2.8 Predicting Intention To Purchase (ITP) using Binary Logistic model

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As a result of the principal component analysis (PCA) carried out to establish the smallest
number of factors or components that best represent the inter-item correlations among
the set of items in the study, binary logistic regression was further conducted. The binary
logistic regression was conducted to predict the likelihood of purchase intention from the
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set of factors established by the PCA that best represents the inter-relationship among
the items affecting purchase intention. This was also used to determine the strength of
the relationships between the outcome (purchase intention) and the predictor variables,
which are the factors obtained through the PCA. Factor scores of these factors or
components were obtained and used for this further analysis (binary logistic regression).
Factor scores are composite variables or measures, which are used to obtain information
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about each individual observations on each factors extracted in the factor analysis
(Distefano, Zhu, & Mîndrila, 2009).
From Table 4.13, the binary logistic regression mathematical model was arrived at as:
Logit (ITP) = (0.852) + (0.291) V1 + (0.015) V2 + (0.413) V3 + (-0.259) V4 (Equation1)
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where:
V1 = Institutional intervention
V2 = Knowledge & Awareness
V3 = Market
V4 = Packaging
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while the odds ratio was calculated using the formula;
Odds (ITP) = e Logit (ITP) (Equation 2)
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meanwhile, the probability of the ITP is calculated using the following formula;
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Probability of ITP = odds (ITP)/1 + odds (ITP) (Equation 3)
The predictor variables were included in the model as shown by the mathematical model
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above and in Table 4.13 respectively. From Table 4.15, the Omnibus Tests of Model
Coefficients’ (goodness-of-fit test) chi-square value (χ2) was 51.140 with four degrees of
freedom (d.f), and significance value of 0.000 (p value < 0.05). This showed that the logit
model (containing the set of predictor variables) was a very good predictor in predicting
the outcome, respondents’ ITP organic rice. The model explained between 5.9 per cent
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(Cox and Snell R2) and 8.4 per cent (Nagelkerke R2) of the variance in the respondents’
ITP organic rice. The Hosmer and Lemeshow’s R2 Test result (χ2 =10.825, sig= 0.212)
also showed the logit model is a good fit (goodness-of-fit indicated by a significant p-
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value > 0.05) (Table 4.15). Cox and Snell R2, Nagelkerke R2 and; Hosmer and
Lemeshow’s R2 tests are used to measure association of relationship between outcome
and the predictor variables. The Hosmer and Lemeshow’s R2 Test has been considered
the best of these tests in terms of its reliability used in SPSS (Julie, 2011). For the model
that has done a good prediction of the outcome, the Hosmer and Lemeshow’s R 2
significance value is expected to be greater than alpha (0.05).
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As shown in the variable in the equations table (Table 4.15), three of the four predictor
variables of ITP were statistically significant meaning they made a unique significant
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contribution to the model. The three predictors were Institution intervention, Market, and
Packaging. The relationship between these predictors and ITP can be explained in two
different ways using the beta coefficient (based on logit values) and the odds ratio
respectively. The strongest predictor of ITP for organic rice was Market, which recorded
a beta coefficient of 0.413 and an odds ratio (exp B) of 1.512 respectively. This indicated
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that a unit increase in the predictor variable Market is associated with a 0.413 unit
increase in the logit variable, respondents’ ITP organic rice. This translates into
multiplying the odds (likelihood) of respondents’ ITP organic rice by 1.512, which is the
exponential of 0.413. So in other words, controlling for other variables in the model, with
the average extra increase in the predictor Market, respondents’ odds or likelihood of
having ITP organic rice are likely to increase by about 1.5 times more. We can test the
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null hypothesis (H0) that in the population, controlling for all the other variables in the
model, that there is no significant relationship between respondents’ ITP Organic rice
and the predictor Market.
The H0 implies the beta coefficient is zero, and the odds ratio one. For the predictor
variable Market with b coefficient (0.413) greater than zero, odds ratio (1.512) greater
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than one with a significant p-value (0.000) less than alpha (0.05), we would reject H0.
This implies that there is a statistically significant relationship between the outcome,
respondents’ ITP Organic rice and the predictor Market. Thus Market predicts ITP
organic rice in this study.
Table 4.15: Result of Binary Logistic Regression Predicting ITP for organic rice
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Predictor variables B S.E. Wald df Sig. Exp
(B)
V1. Institution 0.291 0.083 12.269 1 0.000** 1.338
Intervention
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V2. Knowledge & 0.015 0.086 0.031 1 0.861 1.015
Awareness
V3. Market 0.413 0.085 23.864 1 0.000** 1.512
V4. Packaging
Constant
-2 log Likelihood
-0.259 0.095
0.852
980.654 H 7.503
0.078 117.909
1
1
0.006** 0.772
0.000** 2.343
Nagelkerke R2 value
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0.084
Cox and Snell R2 0.059 Hosmer & Lemeshow R2 value
0.212
(χ2= 10.825)
Omnibus Test of
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Model Coefficients Approx. χ2= 51.140

d.f =4
sig.= 0.000
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Source: Field survey (2014) **Significant at 0.05
This result is supported by the findings of Maoyan, Zhujunxuan, and Sangyang, (2014).
In their findings, market triggers external factors (previous buying experiences,
marketing activities, interactions within the market, product attributes) which then
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impacts on the internal perception factors (perceived attributes, perceived risk) of

consumers thus predicting their ITP. More so, having Market as one of the factors
predicting ITP organic rice obviously implied that people have ITP organic rice for its
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market availability and affordability, proximity to the market and even its market prices.
The predictor Institution intervention (includes Government, non-government

institutions or organizations) with a beta coefficient of 0.291indicates that a unit increase
in the predictor Institution intervention is associated with a 0.291 unit increase in the
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logit variable, respondents’ ITP Organic rice. This translates into multiplying the odds
(likelihood) of respondents’ ITP Organic rice by 1.338, which is the exponential of 0.291.
In other words, controlling for other variables in the model, with the average extra
increase in the predictor Institution intervention activities, respondents’ odds or
likelihood of having ITP organic rice are likely to increase by about 1.3 times more. We
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can test the null hypothesis (H0) that in the population, controlling for all the other
variables in the model, that there is no significant relationship between respondents’ ITP
Organic rice and the predictor Institution intervention. For the predictor variable
Institution intervention with b coefficient (0.291) greater than zero, odds ratio (1.338)
greater than one with a significant p-value (0.000) less than alpha (0.05), we would reject
H0. This implies that there is a statistically significant relationship between the outcome,
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respondents’ ITP Organic rice and the predictor Institution intervention. The result is
supported by the findings of Shamsollahi and Chong (2013). They reported that
Government support and activities impacted on predicting consumers’ ITP organic
foods.
The predictor Packaging with a beta coefficient of -0.259 indicates that a unit increase
in the predictor Packaging is associated with a negative (-0.259) unit change or decrease
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in the logit variable, respondents’ ITP Organic rice. This also translates into multiplying
the odds (likelihood) of respondents’ ITP Organic rice by 0.772, which is the exponential
of -0.259. In other words, controlling for other variables in the model, with the average
extra increase in the predictor Packaging, respondents’ odds or likelihood of ITP organic
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rice are likely to decrease by about 0.8 times more. We can test the null hypothesis (H 0)
that in the population, controlling for all the other variables in the model, that there is no
significant relationship between respondents’ ITP Organic rice and the predictor
Packaging.
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The H0 implies the beta coefficient is zero, and the odds ratio one. For the predictor
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variable Packaging with b coefficient (-0.259) less than zero, odds ratio (0.772) less than
one with a significant p-value (0.006**) less than alpha (0.05), we would reject H0. This
implied a statistically significant relationship but denotes a negative trend of association
between the outcome, respondents’ ITP Organic rice and the predictor Packaging. The
result is interpreted that the predictor variable (packaging) contributes negatively to
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predicting probability of the outcome (intention to purchase organic rice) in this model.
Packaging is being identified as an important factor in consumers’ ITP as products are
assessed based on the packaging details (Ampuero & Vila, 2006). This suggests that
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respondents may not know or may not be sure of the details of what organic rice and its
packaging looks like thus explaining the findings of the result on packaging contributing
negatively to predicting respondents’ ITP organic rice. On the contrary, Ansar (2013)
found out in his study that ecological packaging has significantly positive effect on the
intention of consumers to purchase green products.
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As shown in Table 4.15, the predictor variable, knowledge and awareness was not
statistically significant with the outcome, ITP organic rice meaning that knowledge and
awareness did not make significant contribution to the model in this study. This result is
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in consonant with the findings of Rodríguez, Costa-Font, and Gil (2011), that knowledge
about organic food possibly would not express into direct ITP. In their argument, it was
suggested that certain barriers may restrain consumers’ ability to convert such knowledge
into volitional purchase. On the contrary, Shamsollahi and Chong (2013) identified
knowledge as one of the factors impacting on purchase intention towards organic food.
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4.3 Willingness-To-Pay (WTP) for Organic Rice
This section showed the result of respondents’ WTP or nWTP responses for organic rice.
Result of the predictor variables predicting likelihood of respondents’ WTP using binary
logistic model was also showed. The section also reported respondents’ percentage WTP
by bid value for organic rice using contingent valuation method (CVM). WTP is one of
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the method of determining price of goods or services where price of such goods or
services are not known (Jesdapipat, 2002). According to Mendis and Edirisinghe (2013),
it is defined as the maximum amount a person would be willing to pay, sacrifice, or
exchange in order to receive a good or to avoid something undesired.
4.3.1 Respondents’ Willingness-To-Pay (WTP) Response for Organic Rice
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Result of the frequency analysis for respondents' WTP towards organic rice if price
higher than that of conventional rice and the percentage premium price they would be
willing to pay were presented in Table 4.16 and Figure 4.2 respectively. In Table 4.16,
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458 (54.9%) respondents reported that they were willing to pay a premium price even if
price of organic rice was higher than the price of conventional rice, while 376 (45.1%)
of the respondents declined to be willing to pay a premium price if price of organic rice
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was higher than the price of conventional rice.
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Table 4.16: Responses on WTP for Organic Rice if Price higher than Conventional
Rice
WTP If Price higher Frequency Percentages
Yes 458 54.9
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No 376 45.1
Total 834 100
Source: Field survey, (2014)
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CVM was used to estimate respondents’ percentage premium price WTP responses by
bid value for organic rice. In Figure 4.2, of the 458 (54.9%) respondents that indicated
WTP a price premium for organic rice, majority (221) indicated WTP a premium price
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of less than 5 percent followed by 145 respondents 5-10 percent premium price. 47
respondents indicated percentage WTP of 11-20 percent premium price, 29 respondents
indicated 21-30 percent, four respondents indicated percentage WTP of 31-40 percent
while six respondents indicated 41-50 percent and above 50 percent premium price
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respectively. Figure 4.2 represents respondents’ percentage premium price on their WTP
responses by bid value for organic rice.
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>50 6
41-50 6
31-40 4
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21-30 29
%WTP
11-20 47
5-10 145
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<5 221
0 376
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0 100 200 300 400
H No of respondents
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Figure 4.2: Respondents’ Percentage Premium Price WTP Responses by Bid
Value for Organic Rice.
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4.3.2 Predicting WTP based on Selected Socio-demographic Characteristics using

Binary Logistic Model
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Past studies have identified certain socio-demographic characteristics as factors affecting

or influencing consumers’ WTP for organic food products. Piyasiri and Ariyawardana
(2002) described socio-demographic factors such as number of children in the family,
gender, marital status, age, and education as affecting WTP for organic food. More so,
Govindasamy and Italia, (1999) identified age, income, education and gender as part of
the most important factors influencing WTP. Information gathering about these socio-
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demographic profiles provides opportunities for policy and decision makers. This is
geared towards penetrating more market shares and capturing targeted potential
consumers (Hui et al., 2013).
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Direct logistic regression estimation of the model’s parameters was performed to assess
the impact of selected respondents’ socio-demographic characteristics based on literature
on their WTP or nWTP towards organic rice. They were included in the model on the
likelihood that respondents would be willing to pay higher price or price premium for
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organic rice. These are age, race, gender, household size, number of family members that
are 21 years and above, monthly household income, education level, marital status and
occupation. The logistic model is characterized by:
Log (P/ (1-P)) = β0 + β1X1 + ......... βnXn + ε
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Where;
P= is the probability of the respondents’ WTP higher prices for organic rice as compared
to conventional rice.
β = is the coefficient estimates of X’s which are the predictor variables that could
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influence the probability of the WTP higher prices for organic rice
Xn= number of predictor variables and;
ε= is the stochastic disturbance term.
Log P/ (1-P) = is the ratio of the probability that a respondent is willing to pay higher
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price premium for organic rice to the probability that he or she is not willing to pay higher
price premium for organic rice. It can be considered as the odds of the respondents’ WTP
higher price for organic rice as compared to conventional rice.
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Table 4.17a and 4.17b are the classification tables with the baseline model (model
without the predictor variables) and the model in which the predictor variables are
included respectively. The classification table provides us with an indication of how well
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the model is able to predict the correct category (WTP/nWTP).
In Table 4.17b, the model (containing the predictor variables) correctly classified 66.2
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percent of cases overall. This is sometimes referred to as the percentage accuracy in
classification (PAC). This shows an improvement over the overall 54.9 percent cases
classified by the baseline model in Table 4.17a. This indicates that there was an
improvement in the logistic model when the predictor variables were included in the
analysis as against the baseline model when the predictor variables were not included in
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the analysis. The result displayed in the classification table is also used to calculate the
sensitivity and the specificity of the model respectively. The sensitivity of the model is
the percentage of the group that has the characteristics of interest (WTP premium price
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for organic rice) that has been accurately identified by the logit model (the true positives).
In Table 4.17b, it is showed that the model was able to correctly classify 75.1 percent of
the respondents who did have WTP premium price for organic rice. The specificity of
the model is the percentage of the group without the characteristic of interest (nWTP
premium price for organic rice) that is correctly identified (true negatives). In Table
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4.17b, it showed that the model was able to correctly classify 55.3 percent of the
respondents without WTP premium price for organic rice.
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Table 4.17a: Classification Table (Block 0)
Predicted
Observed
WTP %
No Yes correct
WTP*
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No 0 376 0
Yes 0 458 100.0
Overall percentage 54.9

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Table 4.17b: Classification Table (Block 1)
Predicted
Observed
WTP %
correct
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No Yes
WTP*
No 208 168 55.3
Yes
Overall percentage H 114 344 75.1
66.2
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Note: WTP* = Willingness-to-pay for Organic rice if price higher than Conventional
rice
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From Table 4.18, the Omnibus Tests of Model Coefficients’ (goodness of fit test) chi-
square value was 150.984 with 26 degree of freedom (d.f), and significance value of
0.000 (i.e. p-value < 0.05 thus, it is significant). This implies that the logit model (with
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the set of predictor variables) was a better predictor of the probability of respondents’
WTP higher price for organic rice than the baseline model. This gives an overall
indication of how well the model had performed in making predictions than the baseline
model. This also indicates that the model was able to distinguish between respondents
who reported that they would be willing to pay higher price if price of organic rice higher
than conventional rice.
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This implies that the binary logistic regression model fitted to the data was able to predict
the option that respondents were willing to pay higher prices for organic rice as compared
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to conventional rice. The model explained between 16.6 percent (Cox and Snell R
squared) and 22.2 percent (Nagelkerke R squared) of the variance in the respondents’
WTP higher price status for organic rice. The Hosmer and Lemeshow’s R squared Test
result (χ2 = 10.347, sig= 0.242) showed also that the logit model is a good fit (goodness-
of-fit indicated by a significant p-value> 0.05) (Table 4.18).
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As shown in the variable in the equations table (Table 4.18), only four of the independent
variables made a unique statistically significant contribution to the model. They were age
(40-49yrs, 50-59yrs, ≥60yrs), gender, race (Malay and Chinese) and monthly household
income categories (except RM2001-RM4000 income category). The strongest predictor
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of respondents’ WTP higher price for organic rice was monthly household income
category of RM10,001-RM12,000, which recorded an odd ratio (exp B) of 22.301. This
indicated that respondents who had monthly household income of between RM10,001-
RM12,000 were over 22 times more likely to report WTP higher price for organic rice
than those respondents who were not willing to pay higher price controlling for all the
other factors in the model.
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The other significant monthly income categories are interpreted in similar way as the
aforementioned. This implies that potential consumers with these monthly income
categories could be targetted by marketers as the identified significant income categories
have the likelihood of increasing WTP higher price for organic rice. This finding is
supported by the works of Piyasiri and Ariyawardana (2002); Valerian, Domonko,
Mwita, and Shirima (2011). In their studies, they found out that individuals with high
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income have increasing influence on the purchase of organic vegetables and organic food
products. In the findings of Wanninayake and Shantha (2014), they reported also that
majority who were not willing to pay premium price for organic rice complained of their
existing low income level.
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The odds ratio of 0.713 for gender was less than one, indicating that with a unit change
in gender from zero to one (when you go from female to male), the probability of
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respondents WTP higher price for organic rice decreases controlling for individual
differences in the suppressor effects of other predictor variables in the model. This
implies for every additional unit change in gender, from zero to one (from females to
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males) they are 0.713 times less likely willing to pay higher price for organic rice. This
suggests a more focus on female consumers by policy makers and marketers as result
suggests they are more willing to pay higher prices for organic rice. This finding is
supported by several studies that revealed females are more likely willing to pay higher
prices for organic food products (Ahmad & Juhdi, 2010; Govindasamy & Italia, 1999;
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Loureiro & Umberger, 2004; Oni, Oladele, & Inedia, 2005). Previous studies also
showed gender has a significant influence on organic products like vegetables
(Ariyawardana, Govindasamy, & Puduri, 2009; Xia & Zeng, 2008) among others. In
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contrast to the findings of the study, Rousseau and Vranken (2011) in their own study
found out that gender do not influence WTP for organic apples.
For race, the odd ratio is greater than one (2.068) meaning that for every unit increase in
a Chinese respondent, WTP higher price for organic rice increases by about two times as
compared to those without WTP higher price. Also, with the beta value of 0.727 for racial
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factor, presence of the Chinese race tends to increase the model estimate by 0.727 units.
This suggests for every unit increase in Chinese respondents, 0.727 variance is explained
in the WTP higher price for organic rice. The implication of this finding is that the
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Chinese race is more willing to pay higher price for organic rice as compared to all other
races in the study. This result is supported by Sung (2012), in which he stated that the
Malaysian Chinese consumes organic food products more than the other Malaysian races.
For the age factor, the strongest predictor of respondents’ WTP higher price for organic
©
rice was age category greater than 60 years with beta value of 1.287 and an odds ratio of
3.621. This is interpreted as that for every unit increase in respondents greater than 60
years old, WTP higher price for organic rice increases by about 4 times. Using the beta
value, it could also be interpreted that for every unit increase in respondents greater than
60 years old, variance for WTP higher price for organic rice increases by 1.287. The
other significant age categories are interpreted in similar way as the aforementioned. This
66
implies that potential consumers with these statistically significant age categories should
be targeted by marketers as these identified age categories have the likelihood of
increasing WTP higher price for organic rice based on the result of the study. Hui et al.,(
2013) in their study found out that the elderly have more WTP for organic products
because of their health.
PM
Table 4.18: Result of Binary Logistic Regression for Factors influencing WTP for
Organic Rice
B S.E. Wald df Sig. Exp 95% C.I. for
(B) EXP (B)
Lower Upper
Age 8.164 4 0.086
U
30-39yrs 0.361 0.231 2.453 1 0.117 1.435 0.913 2.255
40-49yrs 0.667 0.296 5.087 1 0.024** 1.948 1.091 3.477
50-59yrs 0.717 0.353 4.125 1 0.042** 2.049 1.025 4.095
≥60yrs 1.287 0.591 4.735 1 0.030** 3.621 1.136 11.541
Gender -0.338 0.160 4.470 1 0.035** 0.713 0.521 0.976
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Race 21.580 3 0.000**
Chinese 0.727 0.185 15.417 1 0.000** 2.068 1.439 2.973
Indian -0.166 0.278 0.359 1 0.549 0.847 0.491 1.460
Others
Household size
No. of family
≥21yrs
0.040
-0.200
0.057
0.430
0.205
0.159 H
0.009
0.956
0.129
1
1
1
0.926
0.328
0.720
1.041
0.818
1.059
0.448
0.548
0.776
2.419
1.223
1.445
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Income (RM) 56.532 6 0.000**
2,001-4,000 0.688 0.369 3.475 1 0.062 1.990 0.965 4.104
4,001-6,000 1.339 0.370 13.120 1 0.000** 3.815 1.849 7.872
6,001-8,000 1.665 0.384 18.844 1 0.000** 5.285 2.492 11.208
8,001-10,000 1.712 0.421 16.947 1 0.000** 5.539 2.425 12.653
R
10,001-12,000 3.105 0.674 21.219 1 0.000** 22.301 5.952 83.565

>RM12,000 2.912 0.657 19.663 1 0.000** 18.401 5.079 66.667
Education 4.112 3 0.250
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Primary 1.392 0.840 2.747 1 0.097 4.024 0.776 20.883

Secondary 1.123 0.758 2.199 1 0.138 3.075 0.697 13.573
University 1.368 0.760 3.243 1 0.072 3.928 0.886 17.416
Occupation 6.074 4 0.194
Private sector -0.397 0.208 3.657 1 0.056 0.672 0.447 1.010
Self-employed 0.039 0.269 0.021 1 0.884 1.040 0.614 1.760
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Housewife -0.028 0.537 0.003 1 0.958 0.972 0.340 2.782

Others -0.223 0.398 0.315 1 0.575 0.800 0.367 1.744
Marital status 0.303 3 0.959
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Married 0.089 0.226 0.156 1 0.693 1.093 0.702 1.703

Divorced -0.019 0.510 0.001 1 0.969 0.981 0.361 2.663
Widow/Widower 0.317 0.769 0.170 1 0.680 1.373 0.304 6.203
Constant -2.538 0.888 8.167 1 0.004 0.079
-2 log Likelihood 997.110 Nagelkerke R2 value 0.222
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Cox and Snell R2 0.166 Hosmer & Lemeshow R2 value 0.242

(χ2= 10.347)
Omnibus Test of Approx. χ2= 150.984
Model d.f =26
Coefficients sig.= 0.000
Source: Field survey (2014) **Significant at 0.05
67
4.4 Summary
The study attempted to clarify awareness and WTP of respondents toward organic rice.
Therefore, in order to achieve this objective it is important to determine respondents’
behaviour by way of their awareness, perception, attitude and their WTP towards organic
rice. The result revealed majority of respondents in this study had heard about organic
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rice with varying levels of knowledge and awareness. Majority of the respondents
indicated their plan to consume organic rice in the future if readily available in the
market.
From the view of perception, majority of the respondents perceived organic rice is
healthier. This is followed by the perception that it is more expensive, safer to consume,
environmentally friendly, contains more nutrients and so forth. Hence, it can be implied
U
that respondents who had the right perception towards organic rice would prefer organic
rice as compared to conventionally grown rice.
Cross-tabulation technique using chi-square analysis was used to test whether there is a
T
significant association or not between the dependent variable (awareness) and the
independent variables (socio-demographic characteristics) regarding the joint frequency
distribution of the cases based on these two categorical variables. The result showed that
H
three out of the five socio-demographic variables have a statistically significant
relationship with awareness at 5 percent significant level (α=0.05). These three variables
are gender (p= 0.001), race (p= 0.029) and education (p=0.040). Thus implies that
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awareness is significantly dependent on gender, race and education of the respondents.
The point-biserial correlation showed a statistically significant negative relationship

between “never heard” and plan to consume organic rice in the future. This could be
implied as the more the respondents do not have awareness (never heard about organic
R
rice) towards organic rice, the more they would likely not plan to consume organic rice
in future. This could be interpreted that the more respondents become aware about
organic rice, the more they would plan to consume organic rice in the future.
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Based on factor analysis, four factors were identified that influenced respondents’
purchase intention towards organic rice. Binary logistic regression was employed to
predict which mostly impacted on the likelihood of respondents’ ITP organic rice among
the four factors identified by factor analysis. Of these four factors, three significantly
predicted respondents’ ITP organic rice by the binary logistic regression analysis. The
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analysis depicted that market had the highest prediction on ITP followed by Institution
Intervention and Packaging respectively. The findings showed the components of PBC
(Institutional intervention, market and packaging) mainly predicted the respondents’
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purchase intention.
The binary logistic regression examined the effect of selected socio-demographic

characteristics on predicting the likelihood of respondents’ WTP or not (nWTP).
Research findings revealed some of the parameters made a unique statistically significant
©
contribution in predicting respondents’ WTP towards organic rice. They were age (40-
49yrs, 50-59yrs, >60yrs), gender, race (Malay and Chinese), and monthly household
income categories (except RM2001-RM4000 income category).
68
CVM was used to estimate respondents’ percentage premium price WTP responses by
bid value for organic rice. Majority of the respondents (221) indicated WTP a premium
price of less than five percent.
PM
U
T
H
IG
R
PY
O
C
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69
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
PM
This chapter gives a concise summary of the study and the research findings on organic
rice, makes a logical conclusion and states some recommendation to assist the organic
rice industry, limitations to the study and recommendations for future research.
5.1 Summary
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People are becoming more aware and conscious about the use of chemicals in
conventional agricultural production and its possible effect on food safety, health of
consumers and the environment. As a result, demand for organically produced food
product is soaring. Due to increasing demand for organic rice in Malaysia with dearth of
T
information on consumers’ behavioural structure toward organic rice purchase and or
consumption, it is expected for policy makers and players in the organic rice industry to
have information and knowledge of consumers as it regards organic rice purchase
H
intention and their willingness to pay (WTP). The objective of the study was to give
clarity on respondents’ awareness and their WTP higher premium price for organic rice
with respect to conventional rice. This involved determining how attitude and perception
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of consumers impacted their intention to purchase organic rice, identifying possible
factors influencing their purchase intention for organic rice and estimating their WTP
In this study, descriptive analysis, cross-tabulation technique using chi-square analysis,

R
correlation analysis (including point-biserial (rpb) correlation), factor analysis, binary

logistic regression and contingent valuation method (CVM) were employed to analyse
the data. Descriptive analysis was used to describe respondents’ characteristic in terms
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of frequency of distribution and percentages. Cross-tabulation technique using chi-square

analysis was used to show relationship between respondents’ awareness and their socio-
demographic characteristics. Point-biserial (rpb) correlation was employed to test the
association between awareness and plan to consume organic rice in future if readily
available. Factor analysis was used to reduce the number of 34 variables and group them
into independent factors with each factor representing a scale of some dimensions.
O
Binary logistic regression analysis was further used to predict which would impact on
ITP organic rice among the factors identified by the factor analysis. Binary logistic
regression was also used to predict likelihood of respondents’ WTP or not (nWTP) based
C
on their selected socio-demographic characteristics. Finally, the dichotomous choice for

CVM technique was used to evaluate respondents’ percentage WTP by bid value towards
organic rice if price higher than the price of conventional rice.
In this study, data from 834 respondents were used to determine their awareness,
©
purchase intention and WTP higher price premium towards organic rice. From the
descriptive analysis, majority of the respondents were below age 30 years, majority of
them had university education, worked in private sector and are married. From the result,
the highest frequency of the respondents received household monthly income range of
RM2001-4000. Generally, majority of the respondents had heard about organic rice with
varying levels of knowledge and awareness. The findings revealed that friends and
70
acquaintances were their main source of information about organic rice. Majority
indicated they have never consumed organic rice before. The result also suggested that
the most important reason for respondent who had consumed organic rice before was
health concern, followed by nutrition and food safety respectively. Of those that had
consumed organic rice before, majority indicated parents and family members influenced
their decision to consume it. Likewise, respondents that had never purchased or
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consumed organic rice before indicated the most important reason as been very
expensive. Majority of these respondents had planned to consume organic rice in the
future if readily available in the market. Likewise, majority also showed WTP higher
price premium for organic rice as against conventionally grown rice. Although, they
mostly signified WTP a premium price of less than 5 percent for organic rice as against
conventional rice.
U
From the view of perception, majority of the respondents perceived organic rice is
healthier. This is followed by the perception that it is more expensive, safer to consume,
environmentally friendly, contains more nutrients and so forth. Hence, it can be implied
that respondents who had the right perception towards organic rice would prefer organic
T
rice as compared to conventionally grown rice.
Result of the cross-tabulation technique using chi-square analysis showed three out of
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the five socio-demographic variables have a statistically significant relationship with
awareness. These three variables are gender, race, and education. Thus implies that
awareness is significantly dependent on gender, race and education of the respondents.
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From the study, the Pearson chi-square test indicated a statistically significant
relationship between respondents’ awareness towards organic rice and their plan to
consume organic rice in the future. This suggests that the higher the awareness of
consumers towards organic rice, they become more knowledgeable thus influencing their
R
decision to purchase or consume organic rice.
Findings of the point biserial (rpb) correlation showed a statistically significant negative
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relationship between “never heard” and plan to consume organic rice in the future. This
implied the more the respondents do not have awareness (never heard about organic rice)
towards organic rice, the more they would likely not plan to consume organic rice in
future. This could be interpreted that the more respondents become aware about organic
rice, the more they would plan to consume organic rice in the future.
O
Based on factor analysis, the result showed Institutional intervention, Knowledge and
Awareness, Market and Packaging as the factors affecting respondents’ purchase
intention towards organic rice. This further implied that Perceived Behavioural Control
C
(PBC) (Institutional intervention, market and packaging) and Attitude (knowledge and
awareness) mainly influenced the respondents’ purchase intention towards organic rice.
Binary logistic regression was further conducted to predict which impacted the most on
ITP organic rice among the factors identified by the factor analysis. The strongest
predictor was Market followed by Institution intervention and Packaging respectively.
©
In terms of respondents’ WTP, the binary logit model was estimated by including
selected socio-demographic profiles as predictor variables. Age (40-49yrs, 50-59yrs,
≥60yrs), gender, race (Malay and Chinese) and monthly household income categories
(except RM2001-RM4000 income category) were statistically significant in predicting
respondents’ WTP likelihood for organic rice. The strongest predictor of respondents’
71
WTP higher price for organic rice was monthly household income category of
RM10,001-RM12,000. The statistically significant socio-demographic profiles predicted
respondents’ WTP towards organic rice.
CVM was used to estimate respondents’ percentage premium price WTP response by bid
value for organic rice. Of the respondents that indicated WTP premium price for organic
PM
rice, majority indicated WTP a premium price of only less than five percent. This implied
if price of organic rice is higher than conventional rice, majority would be willing to pay
an additional price of less than five percent of the price of the conventional rice.
5.2 Conclusion and Policy Recommendations
U
In general, findings of the study suggested majority of the respondents have heard about
organic rice but with different level of awareness. Though, their level of awareness
suggested as low based on the result of the findings. Hence, there is still a limited
awareness as many respondents do not know or, are not sure what organic rice is. Most
T
of those that said they know organic rice very well are in reality not fully conversant of
organic rice. This may be the reason why consumption level is modest or low as shown
by the result as more than half of the respondents had never consumed or purchased
H
organic rice before. There is therefore a need to increase and promote knowledge and
awareness of organic rice products and their benefits among potential consumers. There
would be a need to also promote knowledge and awareness on the use and benefit of
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guarantee systems (labelling, certifications, standards) and so on. This would assist
consumers to learn how to identify organic rice from conventionally grown rice. This can
be done through Government and Non-Government interventions by organizing
educational programmes, promotions and advertisement on organic rice. These efforts
may help consumers have better understanding on the processes involved in organic rice
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production.
Apart from Institutional intervention, knowledge and awareness mentioned above which
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was identified by the result of factor analysis as factors influencing respondents’

purchasing intention toward organic rice, market and packaging were also identified as
factors influencing purchasing intention for organic rice in the study. This implied that
PBC (institutional intervention, market and packaging) and Attitude (knowledge and
awareness) were the two main determinants of respondents’ purchase intention towards
organic rice in Klang Valley, Malaysia. This could suggest that specific packaging
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attributes (such as packaging convenience features, materials, characteristics, disposal

method) are considered to have influence on respondents’ purchase decision for food and
consequently on its consumption.
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Packaging is considered an important extrinsic attributes consumers may apply when

essential intrinsic attributes are very difficult to appreciate when purchasing organic food
products. This is why packaging is always being dynamic in development and
redesigning in order to meet changing demands of consumers. It is thus important for
©
marketers to develop packaging features that would facilitate decision of consumers

toward the purchase of organic rice. Although, binary logistic regression was employed
to predict which mostly impacted on the likelihood of respondents’ ITP organic rice
among the factors identified by factor analysis. The analysis depicted that market had the
highest prediction on ITP followed by Institution Intervention and Packaging
respectively. This implied that marketers and other stakeholders could concentrate more
72
on market strategies and infrastructures towards organic rice industry followed by
Instution Intervention and Packaging respectively.
The findings also indicated majority of the respondents planned to consume organic rice
in future if readily available in the market. This suggests availability of organic rice in
the market is a serious issue and must be addressed. This availability of organic rice in
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the market is linked to market, one of the factors identified as the strongest predictor
affecting respondents’ purchase intention in the study. The implication is that there may
not be enough suppliers of organic rice and the supply available may not be reliably
enough.
The study used CV technique to determine respondents’ decision of their WTP a

premium price or not (nWTP) based on percentage WTP bid value. Generally, the result
U
on CV technique suggests majority of the respondents were reluctant to pay higher price
premium for organic rice. Majority of respondents’ WTP higher premium price for
organic rice only signified a less than 5 percent premium price that they are willing to
pay. More so, almost half of the sample respondents did not signify WTP a price premium
T
for organic rice. This suggests that were the respondents fully aware of the benefits of
organic rice, they might be more inclined to having greater WTP higher price premium.
The result also showed that household monthly income was the most important
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statistically significant factor that predicted respondents’ percentage WTP response by
bid value for organic rice when price is higher than conventionally grown rice.
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Findings of this study would furnish major players in the organic rice industry with better
understanding of respondents’ behaviour while shopping or making decision as regards
organic rice. Stakeholders and relevant institutions in the industry should help give more
education to enhance knowledge and awareness capacity of potential consumers about
organic rice. Education about the guarantee system (labelling, certification and so on)
R
should also be given. This can be achieved through policy direction towards education,
advertizement and promotions to enhance awareness that might help the growth of
organic rice industry through consumers’ increasing WTP higher prices than what this
PY
study recorded. Findings on the socio-demographic profiles that predicted respondents’

WTP would also assist in how marketers can adapt and improve their marketing
strategies to more effectively identify and capture potential market for organic rice. To
address the issue of market availability identified in the study, the Government and
private institutions could form synergy in encouraging and promoting organic rice
production as against its current importation. This would include encouraging Malaysian
O
paddy farmers to adopt the organic system of rice production through giving of subsidies
on seeds, and other requisites. This would lead to availability of more of the product and
ensure its supply to market outlets. Strategies in opening up market outlets and channels
C
could also be achieved to facilitate availability of organic rice to potential consumers at

affordable prices. More so, the result would help policy makers as they can impose price
discrimination strategy like subsidies on consumption between different income
categories as identified in the study. This is likely to encourage and improve purchase
and consumption. Consumers decision to select a product mainly depend on their
©
demographic characteristics, environmental awareness, health benefit, food safety

benefit, convenience of use of the package attributes and package design, amount of the
product in the package container and price (Kamphuis et al., 2006; Pollard, Kirk, & Cade,
2002; Rokka & Uusitalo, 2008). Organic rice marketers may consider these
aforementioned factors while structuring their marketing plan and strategies in getting
consumers to finally purchase organic rice.
73
Consumers can deduce what they like and do not like. They can determine what they will
not buy or what they will buy. Rarely would consumers be able to inform us on why they
would buy product A as compared to product B or otherwise. Hence, it is important to
note that findings of this study would help consumers have indepth understanding of
what they priotize before making their decisions to purchase or consume between
conventional rice and organic rice with higher price premium.
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5.3 Limitation of the Study
Similar to other research, this study also had a number of limitations. According to
Willer, Helga, and Julia (2014) organic market data are not readily available for all
countries. Hence, it has been very difficult to get empirical facts and figures on organic
U
rice consumption and its production in the course of the study. Study samples were also
carefully drawn because of paucity of funds. More so, the limitation may have been
related to misinterpretation of the statements in the questionnaire as enumerators faced
difficulties in communicating with the respondents. This may have been due to different
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competency level in the command of English and education level.
5.4 Recommendation for Future Research
H
Previous finding in the literature suggests that there is increasing demand for organic rice
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in Malaysia and the demand had always been met through importation. According to
Tiraieyari, Hamzah, and Samah (2014), despite the benefits of organic farming, its
adoption rate is still very low among Malaysian farmers. It is necessary to expand
research on organic rice as to understand what could be the possible factors influencing
farmers for their low adoption of organic farming in Malaysia. Future research could also
R
focus on extending the scope of the study to other states in Malaysia. More so, there may
be a need to further investigate in details the way consumers perceived organic rice. This
would help build sustainable consumption pattern among potential organic rice
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consumers.
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C
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74
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APPENDIX
QUESTIONNAIRE
DEPARTMENT OF AGRIBUSINESS AND INFORMATION SYSTEM
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TITLE:
WILLINGNESS-TO-PAY (WTP) FOR ORGANIC RICE IN KLANG
VALLEY, MALAYSIA.
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INTRODUCTION
This questionnaire is part of the fulfilment for the Master of Science research program,
which has been designed to study consumers’ attitude and willingness-to-pay (WTP) for
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organic rice among Malaysians. Your valuable participation in responding to this survey
will assist in gathering useful information about the consumption awareness of
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Malaysians on organic rice. The completion of the survey questions in the questionnaire
will take about 10-15 minutes of your time. Your participation is totally voluntary. The
privacy of this survey is absolutely guaranteed. You do not need to give your name or
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personal address. The data to be collected is only for academic research purpose. Please,
endeavour to respond to the questions as truthfully and as fully as possible. Thank you
for your co-operation in completing the questionnaire.
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RESEARCH CONDUCTED BY: SUPERVISED BY:

IBITOYE, O.O DR. NOLILA MOHD NAWI
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Post Graduate Student Senior Lecturer

Department of Agribusiness and Department of Agribusiness and
Information Systems, Information Systems,
Faculty of Agriculture, Faculty of Agriculture,
Universiti Putra Malaysia, Universiti Putra Malaysia,
Serdang, Selangor. Serdang, Selangor.
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Tel: 0183445846 Tel: 89474908

E-mail:odusiley2k@yahoo.com E-mail:nolila@upm.edu.my
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©
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Section 1- Awareness and Attitudinal Characteristics
In this section, we would like to know about your awareness and attitude towards
organic rice.
PM
1.1) Have you heard about organic rice?
Never heard Heard about but know a little
Heard about but not sure Know very well
1.2) If you have heard about organic rice, where did you obtain the information from?
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Print media (magazines, newspapers) Social media (facebook,
Twitter)
Friends and Acquaintances Electronic media (TV/Radio)
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Family members Others (Please
state):________________
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1.3) Have you ever consumed or purchased organic rice before?
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Yes (If YES, please go to questions (1.4 to 1.6)
No (If NO, go to questions 1.7 to 1.8)

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1.4) What are your reasons for consuming organic rice? (You can choose more than
ONE option).
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Sensory characteristics Food safety
Nutritious Health concern
Environmental concern Others

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(state):____________________
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Tasty
1.5) How many times in a month do you consume or purchase organic rice?
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___________________ (times/month)
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1.6) Who influences your choice for purchasing organic rice?
Myself Friends Parents/Family members
Husband/Wife Children Others
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(state):____________
1.7) If No, why did you not purchase organic rice? (You can choose more than ONE
option)
Expensive Difficult to get in the market
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Do not know where to get it Do not know about organic rice
Do not like it Others (state):_______________
1.8) Do you plan to consume or purchase organic rice in the future if readily available
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in the market?
Yes
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Section 2- Perception towards organic rice
No
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In this section, we would like to know about your perception towards organic
rice.
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2.1) In your perception, Organic rice . . . . . (You can choose more than ONE option)
Is safer to consume More expensive Similar to conventional rice

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Attractive Healthier Environmental friendly
Tastes better Contains more nutrients Others (state):

_____________
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©
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2.2) How important is your understanding (perception) of Organic rice and
Conventional rice based on these factors? Using the scale provided, please circle
your answers.
PM
Very
Unimportant Neutral Important Very important
unimportant
1 2 3 4 5
ORGANIC CONVENTIONAL
FACTORS
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RICE RICE
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1 2 3 4 5 PROCESSING 1 2 3 4 5
1
2
2
3
3
4
4
5
5
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PACKAGING
LABELLING (INFORMATION ON
1
1
2
2
3
3
4
4
5
5
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NUTRITIONAL VALUE)
CERTIFICATION (GUARANTEED
1 2 3 4 5 1 2 3 4 5
FREE FROM CHEMICALS)
1 2 3 4 5 AVAILABILITY 1 2 3 4 5
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1 2 3 4 5 KNOWLEDGE & AWARENESS 1 2 3 4 5
1 2 3 4 5 HEALTH CONCERN & SIDE EFFECT 1 2 3 4 5

PY
1 2 3 4 5 FOOD SAFETY 1 2 3 4 5
1 2 3 4 5 ENVIRONMENTALLY FRIENDLY 1 2 3 4 5
1 2 3 4 5 ANIMAL WELFARE 1 2 3 4 5
O
1 2 3 4 5 NUTRITIOUS 1 2 3 4 5
C
1 2 3 4 5 TASTE 1 2 3 4 5
SENSORY CHARACTERISTICS
1 2 3 4 5 1 2 3 4 5
(TEXTURE, APPEARANCE)
1 2 3 4 5 PRICE 1 2 3 4 5
©
99
2.3) In this part, we intend to know the factors influencing your intention to purchase
organic rice. There are no right or wrong answers to these questions. Just give
your opinion as you select/circle ONE suitable answer for each of the statements
to organic rice and conventional rice respectively below.
Strongly Strongly
Agree Neutral Disagree
PM
agree disagree
1 2 3 4 5
STATEMENTS SCALE
U
Organic rice is similar to conventional rice 1 2 3 4 5
Organic rice is better than conventional rice 1 2 3 4 5
T
Organic rice is tastier than conventional rice 1 2 3 4 5
It is trendy/fashionable to buy organic rice 1 2 3 4 5
rice H
Organic rice is safer to consume compare to conventional
1 2 3 4 5
IG
Organic rice has no chemical residue side effects 1 2 3 4 5
Production of organic rice is good because it prevents
1 2 3 4 5
environmental pollution
Chemical residue cases in conventional rice are due to the
1 2 3 4 5
R
excessive use of chemicals

Use of organic fertilizer and biological control in organic
1 2 3 4 5
rice production are very good
PY
Consumers lack knowledge about organic rice 1 2 3 4 5

Consumers’ educational level is important in purchasing
1 2 3 4 5
organic rice
Consumers’ income level is important in purchasing
1 2 3 4 5
organic rice
O
Family influence is important in purchasing organic rice 1 2 3 4 5

Health benefit is considered a very important factor by
1 2 3 4 5
consumers when purchasing organic rice
C
The products attributes (e.g. nutritious, tasty, attractive)

1 2 3 4 5
influence consumers to purchase organic rice
The perceived attributes (e.g. healthier, safer to consume,
environment friendly) influence consumers to purchase 1 2 3 4 5
©
organic rice
Organic rice has a huge market potential in Malaysia 1 2 3 4 5
Organic rice has a huge market potential in Klang valley 1 2 3 4 5
100
Organic rice is easy to buy in the market in Malaysia 1 2 3 4 5
Organic rice is easy to buy in the market in Klang valley 1 2 3 4 5
Organic rice is only suitable to be sold in supermarkets 1 2 3 4 5
PM
Consumers are willing to purchase organic rice if the price
1 2 3 4 5
is similar to conventional rice
Consumers will purchase organic rice if they have no
1 2 3 4 5
choice
Campaign to consume organic rice need be done by the
1 2 3 4 5
Government
Information about organic rice must be disseminated by
U
1 2 3 4 5
both the Private and Government institutions to the public
The Government has to control the price of organic rice in
1 2 3 4 5
the market
The Government has to give subsidy to producers of
1 2 3 4 5
T
organic rice to reduce the price of organic rice
Advertisements about the benefits of organic rice is easy
1 2 3 4 5
to get on print media and social media respectively
H
No need to conduct advertisement on organic rice
I will consume organic rice after this survey

1
1
2
2
3
3
4
4
5
5
IG
Packaging an important factor in consuming/purchasing
1 2 3 4 5
organic rice.
Packaging material (paper, cardboards, glass, plastics,
metals, etc.) used to package product is an important
R
factor in purchasing organic rice.

Organic rice needs to be labelled to guarantee it is free
1 2 3 4 5
from chemicals
PY
Organic rice needs to be certified to guarantee it is

1 2 3 4 5
produced & processed in the right way
O
C
©
101
Section 3 - Willingness to Pay (WTP) Analysis
This section attempts to know your WTP towards purchasing organic rice.
3.1) If the price of organic rice is higher than conventional rice, will you be willing to
pay a higher price?
PM
Yes No
3.2) If YES, how much additional price are you willing to pay for organic rice as
compared to conventional rice?
1) I am WTP< 5% additional price to buy organic rice as compared to conventional

rice
U
2) I am WTP between 5-10% additional price to buy organic rice as compared to
conventional rice
T
conventional rice
H
conventional rice
IG
conventional rice

conventional rice
R
7) I am WTP> 50% additional price to buy organic rice as compared to conventional

rice
PY
O
C
©
102
Section 4- Socio-demographic profile of respondents
In this section, we would like to know about your Profile.
4.1 ) Age ___________ years.

4.2 ) Gender:
PM
Male Female
4.3) Race:
Malay Chinese Indian Others (Please state):
U
4.4 ) Religion:
Islam Buddhism Hinduism
Christianity Others
T
(state):__________________________
4.5) Household size _______________ persons(s)
H
4.6) Number of family members that are 21 years old and above: ______________
IG
4.7) Monthly Household income: RM_________________
4.8) Level of Education:
Never been to school Primary

R
Secondary College/University
PY
4.9) Occupation:
Public sector Private sector Self-employed
House wife Others (Please state :

O
4.10) Marital status:
Single Divorced
C
Married Widow/Widower
©
THANK YOU FOR YOUR COOPERATION
103
BIODATA OF STUDENT
The student, Olusola Olugbenga IBITOYE was born on the 6th of December, 1975. He
obtained a Bachelor’s degree in Agriculture from the University of Ilorin in 2001 and a
Masters’ degree in Agricultural Extension and Rural Development from the prestigious
PM
premier University, University Ibadan in 2008. He underwent the compulsory one year
National Youth Service Corps with the 2001/2002 session. He works currently with the
Ekiti State Ministry of Agriculture, Ekiti State.
U
T
H
IG
R
PY
O
C
©
104
LIST OF PUBLICATIONS
Journals
1. Ibitoye, O. O., Nawi, N. M., Kamarulzaman, N. H., & Man, N. (2014). Consumers’
PM
awareness towards organic rice in Malaysia. International Food Research Journal,
21(5), 1711-1718.
2. Ibitoye, O. O., Nawi, N. M., Man, N., & Kamarulzaman, N. H. (2014). Factors
Influencing Consumers' Purchasing Behaviour towards Organic Rice in Malaysia.
World Applied Sciences Journal, 32(4), 611-617.
U
3. Olusola O. Ibitoye, Nolila M. Nawi, Norsida Man, Nitty H. Kamarulzaman.
Determining consumers’ intention and willingness-to-pay (WTP) for organic rice
in Klang Valley, Malaysia. International Journal of Research in Marketing
(Submitted: Manuscript ID: WFPM-2015-0061).
T
Conferences
1.
H
Ibitoye, O. O., Nawi, N. M., Kamarulzaman, N. H., & Man, N (2015). Consumers’
Willingness-To-Pay (WTP) For Organic Rice Based On Their Socio-Demographic
IG
Profiles. Conference on Agri Entrepreneurship Development: Issues and Trends
(CAgE2015). 26 – 27 January 2015, Faculty of Agriculture, Universiti Putra
Malaysia Selangor, Malaysia.
R
Poster Presentation
1. Ibitoye, O. O., Nawi, N. M., Kamarulzaman, N. H., & Man, N (2014). Consumers’
PY
Willingness-To-Pay (WTP) for Organic Rice in Klang Valley, Malaysia.

International Agriculture Congress 2014, 25-27 November, Pullman Putrajaya
Lakeside, Putrajaya, Malaysia.
O
C
©
105
©
C
O
PY
R
IG
H
T
U
PM

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UNIVERSITI PUTRA MALAYSIA

CONSUMER AWARENESS, PERCEPTION, ATTITUDE AND

OLUSOLA OLUGBENGA IBITOYE

OLUSOLA OLUGBENGA IBITOYE

Thesis Submitted to the School of Graduate Studies, Universiti Putra Malaysia, in

Copyright © Univerisiti Putra Malaysia

CONSUMER AWARENESS, PERCEPTION, ATTITUDE AND

OLUSOLA OLUGBENGA IBITOYE

study investigated Malaysian consumers‟ awareness, factors influencing their purchase

Section 1 was based on questions related to awareness and attitudinal characteristics of

analysis, cross-tabulation technique using chi-square analysis, correlation analysis,

KESEDARAN, PERSEPSI, KELAKUAN, DAN KESANGGUPAN UNTUK

OLUSOLA OLUGBENGA IBITOYE

Pengerusi : Nolila Mohd Nawi, PhD

pembekal tempatan. Namun yang sedemikian, permintaan bagi makanan organik di

produk organik. Permintaan bagi beras organik di Malaysia dilaporkan semakin

Seramai 834 responden diperoleh sebagai sampel menggunakan soal selidik

kesanggupan responden untuk membayar dan untuk menentukan peratusan harga

My sincere in depth and profound gratitude goes to my supervisory committee, Dr Nolila

Nolila Mohd Nawi, PhD

Norsida Man, PhD

BUJANG BIN KIM HUAT, PhD

I hereby confirm that:

Name and Matric No: Ibitoye Olusola Olugbenga GS34135

This is to confirm that:

Committee: Nitty Hirawaty Kamarulzaman PhD

3.2.1 Primary Data 25

3.5 Data Analysis 29

3.5.3 Correlation Analysis 30

1.1 Estimate of Malaysia’s Paddy Planted Area and Production (2004-2013) 3

1.3 Nutritional Benefits of Organic Rice versus Conventional Rice 5

3.1 Predictor Variables to Predict WTP or nWTP Towards Organic rice 34

4.2 Respondents’ Awareness and Attitude toward Organic Rice 42

4.6 Correlation between Awareness towards Organic Rice and Plan to

4.7 Respondents’ Perception towards Organic Rice 48

4.8a Respondents’ Perception towards Organic rice 49

4.8b Respondents’ Perception towards Conventional rice 49

4.9 Summary of Consumer’s Perception towards Organic Rice 51

4.10 Reliability, Kaiser Meyer-Olkin (KMO) & Bartlett’s Test 53

4.11 Communalities for Items 54

4.12 Result of Variance Explained 55

4.13 Factors Influencing Consumers’ Purchasing Intention toward Organic Rice 57

4.14 Internal Reliability Analysis for the Factors 58

4.17a Classification Table (Block 0) 65

4.17b Classification Table (Block 1) 65

Respondents’ Percentage Premium Price WTP Responses

CVM Contingent Valuation Method

DNA Deoxyribo Nucleic Acid

PPMC Pearson Product Moment Correlation

rpb Point-biserial Correlation

SSL Self-Sufficiency Level

SOM Malaysia Organic Scheme

SPSS Statistical Package for the Social Sciences

TCM Travel-Cost Method

TPB Theory of Planned Behaviour

TRA Theory of Reasoned Action

and other crops in Malaysia (Toriman et al., 2013).

1.2 Rice Industry in Malaysia