Catherine R. Greene

RISK AND RISK MANAGEMENT IN ORGANIC AGRICULTURE: VIEW OF ORGANIC FARMERS

In a series of focus groups during 2001 and 2002, organic farmers from different regions of the United States identified a wide range of risks to their operations. The focus groups were facilitated by the University of Maryland in cooperation with a research team from USDAs Economic Research Service, to explore the risks faced by organic farmers, how they are managed, and needs for risk management assistance. Contamination of organic production from genetically modified organisms was seen as a major risk, particularly by grain, soybean and cotton farmers. Focus-group participants producing grains and cotton—many of whom knew about and had obtained crop insurance—raised concerns about coverage offered, including the need for insurance to reflect the higher prices received for organic crops. Most fruit and vegetable producers participating in the focus groups had little knowledge of crop insurance. When provided with basic information about crop insurance, operators of small fruit and vegetable farms were skeptical about its usefulness for their type of operation.

The profitability of organic soybean production

Results from long-term experimental trials suggest that similar yields and lower costs are possible with organic compared to conventional soybeans, but there is little information about the relative costs and returns of these systems on commercial farms. This study examines the profitability of commercial soybean production using a nationwide survey of soybean producers for 2006 that includes a targeted sample of organic growers. Treatment-effect models are specified to characterize adopters of the organic approach and to isolate the impact of organic choice on operating, operating and capital, and total economic costs of soybean production. Organic soybean producers tend to be younger, have less crop acreage, and are less likely to work off-farm than conventional producers. Organic soybean production costs range from about

Characteristics, Costs, and Issues for Organic Dairy Farming

1 to

The Use of Markets to Increase Private Investment in Environmental Stewardship

6 per bushel higher than those for conventional soybeans due to both lower yields and higher per-acre costs, while the average organic price premium in 2006 was more than

The Profit Potential of Certified Organic Field Crop Production

9 per bushel. Long-term cropping systems data suggest significant returns to organic systems result from similar yields and lower costs than conventional systems, but the high returns to commercial organic production found in this study can only be attributed to the significant price premiums paid for organic soybeans. Average organic soybean price premiums have remained high since 2006 despite much higher conventional soybean prices as users of organic soybeans attempt to retain and attract more acreage. However, increases in conventional soybean prices and fuel prices reduce the incentive for planting organic soybeans by improving returns to conventional production and increasing the relative costs of organic production.

Adding value in the organic sector: Characteristics of organic producer–handlers

Organic milk production has been one of the fastest growing segments of organic agriculture in the United States in recent years. Despite the growing number of organic dairy operations, the characteristics of organic dairy operations and the relative costs of organic and conventional milk production have been difficult to analyze. This study, using 2005 ARMS data for U.S. dairy operations, which include a targeted sample of organic milk producers, examines the structure, costs, and challenges of organic milk production. The analysis addresses economies of size, regional differences, and pasture use in organic milk production and compares organic and conventional milk production costs. The findings suggest that economic forces have made organic operations more like conventional operations and that the future structure of the industry may depend on the interpretation and implementation of new organic pasture rules.

Agricultural land markets in U.S. urban-fringe counties

U.S. farmers and ranchers produce a wide variety of commodities for food, fuel, and fiber in response to market signals. Farms also contain significant amounts of natural resources that can provide a host of environmental services, including cleaner air and water, flood control, and improved wildlife habitat. Environmental services are often valued by society, but because they are a public good—that is, people can obtain them without paying for them—farmers and ranchers may not benefit financially from producing them. As a result, farmers and ranchers under-provide these services. This report explores the use of market mechanisms, such as emissions trading and eco-labels, to increase private investment in environmental stewardship. Such investments could complement or even replace public investments in traditional conservation programs. The report also defines roles for government in the creation and function of markets for environmental services.

RECENT GROWTH PATTERNS IN THE U.S. ORGANIC FOODS MARKET

Organic crop acres in the United States more than doubled between 2002 and 2011 as acreage increased from 1.3 to over 3 million acres. While acreage for some major field crops increased substantially during this period, growth was more modest or had stalled for others. This study examines the profitability of corn, wheat, and soybean production using national survey data and finds that significant economic returns are possible from organic production of these crops. The main reason for higher per-bushel returns to organic production is the price premiums paid for organic crops. Despite potentially higher returns, the adoption of organic field crop production has been slow and is challenging due to such factors as achieving effective weed control and the processes involved with organic certification.

U.S. ORGANIC FARMING IN 2000-2001: ADOPTION OF CERTIFIED SYSTEMS

Sales of organic food have soared over the past decade. Although nearly all organic commodities pass through the hands of at least one intermediary on the way from the farmer to the consumer, there is a dearth of literature examining organic food marketing, especially for the middle section of the supply chain. This paper uses new survey data on organic intermediaries (organic handlers) to characterize firms that are certified to both handle and produce organic foods, or organic producer– handlers. Because of their direct link to the production level, the producer–handler has the potential to provide insight into value-added activities in the organic sector. A logistic regression is estimated in order to identify characteristics that make it more likely that a firm would be both a certified organic handler and a certified organic producer, while survey results are also used to describe some of the main challenges these producer–handlers face in handling their products. Organic producer–handlers ranked problems with ingredient procurement and supply and international trade issues as the highest barriers to growth. The model indicated that with few exceptions, many of the operational and procurement characteristics of organic producer–handlers are comparable to the entire organic handling population. However, those facilities dedicated solely to organic handling and those certified longer are more likely to be organic producer–handlers. Use of direct markets by organic handlers has the most robust relationship in the model, although marketing to natural products independent retailers and wholesalers are also important.

Price premiums hold on as U.S. organic produced market expands

Abstract A multivariate interaction detection model was used to assign urban-influenced counties into statistically-optimal groups. The groups delineated 3 types of farmland markets within the predefined set of counties. From a set of county-level variables representing farm and non-farm factors, the procedure found 3 farm-related factors, agricultural sales acre -1 , farm income acre -1 and farm size, to be important in explaining the variation in average farmland values among the urban-influenced counties. The results imply a diversity among urban-influenced counties that is not accounted for in aggregate analyses that use a simple dichotomy between rural and urban counties.