Academic journal article Journal of Agricultural and Applied Economics

Viability of Organic Production in Rural Counties: County and State-Level Evidence from the United States

Academic journal article Journal of Agricultural and Applied Economics

Viability of Organic Production in Rural Counties: County and State-Level Evidence from the United States

Article excerpt

We investigate the determinants of organic farming in the United States. State-level data show that the organic farming sector has grown over the last decade, but growth has been very heterogeneous with few states accounting for most of the growth. Further analyses of county data reveal that favorable natural amenities, water for irrigation, and government payments have a positive effect on most measures of organic farming used here. Results further point out that organic farming operations are more popular among young farmers. Adjacency to metro areas is also an important determinant for the number of organic operations. Organic farming is more important for the agricultural sector of the areas that are somewhat remote but that does not appear to be the case for very remote rural areas.

Key Words: county, organic farming, rural

JEL Classifications: Q10, R58

Organically raised products often return a higher revenue share to farmers than conventional products while promoting sustainable production methods and small-scale agriculture. Some suggest that organic farming on family farms has the potential to revitalize U.S. rural areas and their economies (Vasilikiotis, 2001). Research in the European Union suggests that as a result of an increased consumer demand for organic products, organic farming has already contributed to the economic and social development of many rural areas in Europe (European Commission, 2009). U.S. prospects also look promising: organic production has more than doubled in the United States since the late 1990s and organic sales of foods have almost quintupled, increasing from $3.6 billion in 1997 to $21.1 billion in 2008 (Greene et al., 2009). Although new organic producers have emerged to meet the rapidly growing demand, many handlers of organic product still experience critical shortages of organic products and are unable to meet the demand (Greene et al., 2009).

Studies on organic farming have generally examined organic farming for particular sectors (e.g., Bhuyan and Postel, 2009; Kuminoff and Wossink, 2010) or the characteristics of individual farmer adopters (e.g., De Cock, 2005). However, studies on organic farming at the more aggregate U.S. county level remain largely descriptive. This study examines the determinants of organic farming adoption in rural areas using county- and state-level evidence. Specifically, we investigate the factors that influence the number of small and large organic farming operations as well as the importance of organic farming on the whole agricultural sector at the county level.

Our findings suggest that organic farming depends on the quality of natural amenities, but also on the degree of "rurality" as measured by the U.S. Department of Agriculture (USDA) Economic Research Service's (ERS) 2003 definition of rural-urban continuum codes for areas in the United States. Adjacency to a metro area also seems to play a role on the number of organic farmers. The findings of this study may provide useful information to poUcymakers who seek to enhance their understanding of the organic production sector and promote agricultural sustainability in rural areas.

The rest of the article is organized as follows. Section two provides a description of the empirical strategy. Section tiiree presents die data used. Section four discusses county- and statelevel results. Section five concludes and draws policy implications and further research.

Empirical Strategy

We investigate the determinants of organic agriculture at the county level as well as the factors that influence the number of small (less than $5,000 annual sales) and large (more than $5,000 sales) organic operations in a multivariate regression framework. We aim at answering three questions. First, we uncover determinants of the overall "quantity" of organic farming. We use two measures of quantity: the number of organic operations (a measure of the number of households involved in farming) and organic farming acres (a measure of resources dedicated to organic farming) at the county level. …

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