Indonesian consumers’ willingness to pay for organic coffee

The use of organic certification benefits farmers as well as the environment. Organic coffee farmers, on the other hand, face the challenge of determining how much consumers are willing to pay for the organic coffee they produce. The purpose of this study was to investigate the factors that influence Indonesian consumers’ willingness to pay for organic coffee, as one of the indicators that influence consumer purchasing decision behavior. A structural equation model analysis was used to collect data by distributing questionnaires to a total of 766 respondents. The model was created by combining variables from the Theory of Planned Behavior and consumer awareness. This study was successful in demonstrating the direct impact of attitude, subjective norms, PBC, and consumer awareness on consumers’ willingness to pay for Indonesian organic coffee. On the other hand, health and environmental sustainability factors had an indirect influence on consumers’ willingness to pay for organic coffee. Meanwhile, regional development factors had no effect on consumers’ willingness to pay, either directly or indirectly.


Introduction
Consumer understanding of ecolabelling has increased.Increasing consumer awareness of ecolabelling on the products they consume has forced producers to apply the concept of sustainability to their production processes.Food safety is the main reason for consumers influencing the decision making of purchasing ecolabelling products [1].This consumer awareness has led to many studies related to eco-labelling products from various agricultural commodities [1][2][3].It is critical to note consumers' willingness to pay for and consume ecolabelling products.The existence of a standardized sustainable production process will have an impact on increasing commodity prices [4].One of the ecolabelling that is of concern to researchers today is organic certification of agricultural products.
Coffee is a commodity attracting the attention of consumers today, both in Indonesia and in the international market.Coffee consumption is currently experiencing a significant increase [5].The coffee production process has become a new paradigm.Market expansion and increasing public 1230 (2023) 012019 IOP Publishing doi:10.1088/1755-1315/1230/1/012019 2 awareness of the environment have also become catalysts for implementing organic coffee production.Increasing organic coffee production is an effort by farmers to increase their competitive advantage in the market [6].Farmers will have the opportunity to increase their welfare from this increased competitive advantage.Farmers get a premium price from implementing organic certification.
Although the application of organic certification has a positive impact on farmers and the environment, organic coffee farmers face challenges in terms of consumer willingness to buy the organic coffee they produce.Consumer willingness to pay will drive consumer behavior in determining the purchase of organic coffee on the market [7].The purpose of this study was to investigate the factors influencing Indonesian consumers' willingness to pay for organic coffee, which is one of the indicators influencing consumer purchasing behavior.

Data and method
This study was carried out in Medan City in 2021.Purposive sampling was used to select Medan City as the research location, with the understanding that Medan City is one of Indonesia's metropolitan cities with diverse population characteristics, and thus could describe the state of Indonesian society in general.The total number of samples used in this study was 766 people.The number of samples was determined by taking into account the method of analysis used in this study.If the number of samples used in research using the Structural Equation Model (SEM) approach is greater than 400 respondents, the results obtained will be more sensitive [8].Data collection was carried out by interview technique using a Likert scale of 1-7 (1: very inappropriate; 7: very suitable).
The Structural Equation Model (SEM) analysis method was used in this study to estimate the effect of exogenous and endogenous variables with unobserved variable properties.SEM was a statistical analysis that combined two techniques: factor analysis and simultaneous models in econometrics [9].SEM enables the estimation of a series of multiple regression equations that are independent but have a close relationship [8,10].SEM, through the use of moderating (intervening) variables, provides information about the hypothesized impact either directly or indirectly [11].
In this study, the model was constructed using several theoretical approaches that could influence consumers' willingness to pay.The relationships among variables were measured directly or indirectly as shown in Figure 1.The theory of planned behavior had 3 exogenous variables that influenced willingness to pay, namely Perceived Behavior Control (PBC), Subjective norm and attitude.Furthermore, health, environmental, and regional development factors influenced the intervening variable of consumer awareness of organic coffee.This study's research hypotheses were: H1a : The health factor increased consumer awareness of organic coffee.H1b : The environmental factor increased consumer awareness of organic coffee.H1c : Organic coffee consumer awareness increased as a result of a regional development factor.H2a : Health factor had a positive effect on the willingness to pay of organic coffee consumers.H2b : Environmental factors influenced organic coffee consumers' willingness to pay.H2c : A factor for regional development had a positive effect on organic coffee consumers' willingness to pay.H3 : Subjective norms influenced organic coffee consumers' willingness to pay.H4 : Organic coffee consumers' willingness to pay increased as a result of increased consumer awareness.H5 : PBC had a positive effect on organic coffee consumers' willingness to pay.H6 : Organic coffee consumers' willingness to pay increased as a result of their consumer behavior.

Respondent demographics
Female respondents (54.4%) and male respondents (45.6%) dominated this study's respondents.The majority of respondents belonged to the millennial and post-millennial generations (generation z), which had preferences that differed from those of other generations.74.7% of the respondents who were interviewed had ages ranging from 20-30 years.The majority of respondents' last education was at the high school level, 63.9% of whom were continuing their education to the university level.Based on the age and education of the respondents interviewed, the majority of respondents were coffee connoisseurs who had consumed organic coffee in coffee shops.The characteristics of the millennial and post-millennial generations in this study had a tendency to consume coffee as a lifestyle.

Measurement model
SEM analysis required that each variable tested passed model testing, namely the reliability and validity tests of each variable.The reliability test used the value of loading factor and composite reliability [13,14].There were two validity tests used in SEM, namely convergent and discriminant validity [9].Loading factor and composite reliability (CR) values had thresholds, namely loading factor > 0.5 and CR > 0.7 [10].On the other hand, validity measurement can use the Average Variance Extracted (AVE) which is greater than 0.5 [15].Table 1 shows the loading factor, CR and AVE values of each variable that had passed the specified threshold.

Hypothesis testing
Hypothesis testing was used as an instrument for estimating the effect of exogenous variables on the willingness to pay of Indonesian organic coffee consumers.The estimation results are shown in Table 2.The hypothesis testing was carried out in two stages.The first stage was the direct influence of each exogenous variable on its endogenous one.Furthermore, the second stage was the influence of health, environmental, regional development factors, consumer awareness and TPB variables on the willingness to pay for organic coffee.The results of the SEM hypothesis test revealed that consumer attitudes could be a significant predictor of willingness to pay for organic coffee.If consumers have a good perception of organic coffee products, consumers will be encouraged to pay more for organic coffee [16].Subjective norms in this study was proven to be able to have a positive influence on the willingness to pay of organic coffee consumers.The majority of Indonesian organic coffee consumers relatively trust references from those closest to them in making purchasing decisions [17].The PBC variable had a positive influence on willingness to pay [18].Consumer experience in using products and the convenience of consumers to obtain products would increase the willingness to pay from consumers.Consumer confidence in organic products safe for health and environmental sustainability could increase consumer awareness which would indirectly influence consumers' willingness to pay more.Meanwhile, regional development factor did not affect the willingness of consumers directly and indirectly to buy organic coffee.

Conclusion
This study succeeded in proving the influence of attitude, subjective norms, PBC and consumer awareness directly on consumers' willingness to pay for Indonesian organic coffee.On the other hand, health and environmental sustainability factors indirectly had an indirect influence on consumers' willingness to buy organic coffee.Meanwhile, regional development factor did not have a direct or indirect impact on consumers' willingness to pay for organic coffee.

Figure 1
Figure 1 Research conceptual framework

Table 1
CR and AVE values of each variable

Table 2
Estimation of the structural equation model