The Economic Viability and Growth of Organic Farming: Spatial and Temporal Variation of Organic Price Premiums at Retail and Their Transmission into Farm Prices
Department and College
Department of Applied Economics in the College of Food, Agricultural and Natural Resource Sciences
NIFA Grant (Non-Formula)
Project Start and End Date
Facilitating the growth of the organic industry is central to the U.S. public policy priority of developing economically, environmentally and socially sustainable local and regional food systems. The organic food market has grown rapidly since the 1980s and has opened up new opportunities for farmers, food manufacturers, and retail grocers. However, the industry is facing important challenges to meet the growing demand and stay globally competitive. Also, the state of academic research on organic foods is hindered by the lack of comprehensive micro-level data on organic marketing. The overarching long-run goal of the proposed research is to improve our understanding of the functioning of organic markets by studying organic price premiums at retail and their transmission into farm prices. The objectives supporting this goal are: construct panel price indices using point-of-sale scanner data for both organically and conventionally grown farm products to estimate temporal and spatial changes in organic price premiums in the United States; use the panel price indices to investigate the determinants of price premiums and evaluate the impact of price premiums on the growth of the organic industry; perform a comparative analysis of organic and conventional markets by investigating the extent to which farm-to-retail price transmission rates differ between the two markets; identify implications of findings on differences in structure, conduct, and performance of the two markets for the growth of organic farming and benefits received by farmers from public investments made in the organic sector.