Luanne Lohr

Implications of Organic Certification for Market Structure and Trade

Certification of organic products serves three functions. First, it assures consumers that a product that is not observably different from nonorganic food was grown, processed, and packaged according to rules that limit or ban synthetic inputs and that protect the environment. Second, it assures producers that unscrupulous use of the term organic does not defraud them of price premiums and market share that can be earned from certified foods.

Supply and Demand Factors for Organic Produce

Although the organic produce industry is growing dramatically, little is known about market structure. We estimate a system of reduced-form equations to evaluate supply and demand factors that influence equilibrium farm price and quantity in wholesale markets for organic broccoli, carrots, and lettuce. In the long run, demand factors dominate supply factors. Reduced wholesaling costs, increased margins by which organic wholesale price exceeds nonorganic price, and higher consumer income stimulate both farm price and output. Increasing the nonorganic farm price decreases equilibrium quantity of organics. Market expansion strategies should target consumers and wholesalers. Copyright 1996, Oxford University Press.

Choice of insect management portfolios by organic farmers: lessons and comparative analysis

Abstract American farmers do not always choose sustainable insect management practices, even when they can improve their farm economic and environmental conditions by doing so. Organic farmers are dependent on alternative, biology-based insect control methods and are innovative in their on-farm experimentation with new strategies. By understanding the factors that influence the insect management portfolio chosen by organic farmers, research and education programs to promote sustainable insect management practices for all farmers may be devised. A negative binomial model of the factors influencing the number of alternative insect management practices adopted is applied to survey data from American organic farmers. It is found that college-educated farmers with smaller acreages, more than half their acreage in horticultural production, and extensive experience with organic production methods, have the greatest diversity in their insect management portfolios. There is a strong indication that on a regional basis, uncertainty over institutional and infrastructure support for organic agriculture results in the adoption of more strategies. Recommendations include more support for farmer information exchanges and mentoring programs that rely on the expertise of organic farmers, and more funding for farmer-driven organic research that can be extended to all farm populations.

Farmer risk assessment for voluntary insecticide reduction

Abstract We develop a theoretical basis for voluntary reduction in insecticide use, and quantify the subjective value farmers place on reducing environmental risk. The indirect utility model is used to quantify the acceptable financial cost of eliminating one insecticide application in return for avoidance of moderate risk to the environment. The mean valuation in Illinois, Iowa, Nebraska and Ohio, USA, is

Choices of Marketing Outlets by Organic Producers: Accounting for Selectivity Effects

8.25 per acre. Acceptable yield loss increases with importance of environmental goods, with formal education and with farming experience. Valuation increases with total expenditure on insecticides up to

Technical Efficiency of U.S. Organic Farmers: The Complementary Roles of Soil Management Techniques and Farm Experience

89 per acre. Decomposition of the Tobit model used in estimation indicates that voluntary programs should target intensification rather than extensification of participation to maximize effectiveness.

CONSUMER EFFECTS OF HARMONIZING INTERNATIONAL STANDARDS FOR TRADE IN ORGANIC FOODS

Organic farmers have traditionally relied on a variety of marketing channels, suggesting that earned organic income will depend on the farmers experience in producing and selling organic products and their comparative advantage in bargaining and marketing skills. A discrete choice model of the choice of marketing channels is developed which accounts for the role of selectivity bias. Farmers who are most likely to sell through a diversified set of outlets or to use a single outlet have increased earnings relative to farmers who overlook these marketing options. Producers with less experience gravitate toward use of a single marketing outlet while more experienced producers tend to diversify and market through all three channels. Constraints in selling organic products tends tend to have a negative effect on farm income.

A BIOECONOMIC DECISION MODEL COMPARING COMPOSTED AND FRESH LITTER FOR WINTER SQUASH

Agricultural policymakers place increasing emphasis on developing efficiency measures for organic producers in order to evaluate regulatory strategies and evolving organic market conditions. We develop technical efficiency measures for U. S. organic farmers using a stochastic production frontier. Farm decisions about acquiring and managing organic soil materials from on-farm and local sources are incorporated into the technical efficiency measure. Productivity differences between newer entrants to organic farming and more experienced producers are estimated in order to isolate the impact of learning and management expertise on farm-level technical efficiency.

Assessing the Technical and Allocative Efficiency of U.S. Organic Producers

Even if governments agree on equivalency of organic standards across countries, consumers may still believe domestically produced organic foods are superior to imports. We simulated a partial equilibrium model of trade in organic wheat between the United States and Germany to illustrate the welfare gains and losses associated with international harmonization of organic standards. Six cases were examined - no equivalency in standards (the status quo), equivalency of standards with complete and incomplete import acceptance, exporters certifying in importing country with complete and incomplete import acceptance, and exporters paying educational costs, with incomplete import acceptance. Results demonstrate that importing country consumers are better off if they are willing to accept imports as equivalent to domestically produced organic foods. Strategies to reduce resistance such as educational programs or foreign certification add costs to production that reduce quantity traded and impose welfare losses on exporting country producers and importing country consumers.

The US Consumer Perspective on Organic Foods

Abstract Decision aids are needed to identify management strategies for complex agricultural problems affecting numerous stakeholders. Our objective was to develop a bioeconomic decision aid examining poultry litter application to winter squash, Cucurbita maxima , on the basis of multiple goals: enhancing environmental and soil quality, maximizing waste recycling, and maximizing net revenues. Because farm-level decisions about waste management may conflict with community goals, the decision aid balances the preferences of squash growers, poultry producers, and community-level decision makers. The aid utilizes a simulation model that compares four litter management alternatives: (1) fresh poultry litter applied to meet crop nitrogen (N) needs; (2) fresh poultry litter applied to meet crop phosphorus (P) needs; (3) composted poultry litter to meet crop N needs; and (4) composted poultry litter to meet crop P needs. Output from biophysical submodels compares well to literature data. Sensitivity tests show strong correlation between nutrient accumulation in soil pools and estimates of potentially available nutrients in fresh and composted litter. The decision model outcome, when averaged across stakeholder groups, clearly favors composted litter applied to meet crop P needs. Decision aids can help various stakeholder groups see how their priorities interact as well as demonstrate the importance of long-term analysis to assess alternative management strategies.