The Motivation for Organic Grain Farming in the United States: Profits, Lifestyle, or the Environment?
Peterson, Hikaru Hanawa, Barkley, Andrew, Chacón-Cascante, Adriana, Kastens, Terry L., Journal of Agricultural and Applied Economics
The objective of this research is to identify and quantify the motivations for organic grain farming in the United States. Survey data of US organic grain producers were used in regression models to find the statistical determinants of three motivations for organic grain production, including profit maximization, environmental stewardship, and an organic lifestyle. Results provide evidence that many organic grain producers had more than a single motivation and that younger farmers are more likely to be motivated by environmental and lifestyle goals than older farmers. Organic grain producers exhibited a diversity of motivations, including profit and stewardship.
Key Words: bootstrapping, logistic regression, organic farming, profit maximization, environmental stewardship
JEL Classifications: Q01, Q12, Q15
Organic farming in the United States has grown rapidly since the 1990s. The overall certified organic acreage increased more than fourfold from 1992-2008 to represent 0.57% of total farm acreage in 2008 (U.S. Department of Agriculture, Economic Research Service [USDA/ ERS], 2010). Although the organic acreage for vegetables exceeded 8.6% of total acreage in 2008, the percentage of the top US field crops grown under certified organic farming systems remained minimal: 0.21% for corn and 0.20% for soybeans in 2008, yet the growth in retail sales of organic meat and dairy products led the growth in sales of other organic foods in 2005 and 2006 (Organic Trade Commission [OTA], 2007), fueling the growth hi the number of certified organic livestock for milk cows to reach 2.7% of all milk cows in 2008 (USDA/ ERS, 2010). In 2008, the retail sales of organic bread and grains recorded the strongest growth among all organic food categories (OTA, 2009). Given these trends, organic grain production is likely to continue.
Organic grain farming entails production and marketing practices that are distinct from conventional grain farming and from organic fruit and vegetable farming. In addition to the list of allowed and prohibited substances maintained by the National Organic Program (NOP), the organic supply chain differs from the conventional grain infrastructure. For example, conventional farmers can deposit the entire harvest at a local grain elevator, whereas an organic crop must have its identity preserved throughout production and distribution channels. Most often, organic grain sales are handled through individual contracts directly with the buyer or through a trader. In addition to default risk associated with individual contracts, organic grain farmers are exposed to the risk of the commodity not meeting organic certification as a result of genetically modified crop contamination or spray drift from neighboring conventional farms.
These differences in practices imply cost differences, whereas the organic characteristic is mostly associated with premium in the marketplace. Although the prices received by producers of organic products are not as thoroughly documented as conventional products at the retail level, organic grains have received considerable premia over conventional grains (Heiman and Peterson, 2008). Whether the premium guarantees profit is uncertain. Several studies based on long-term experimental trials have reported that organic cropping systems are at least as profitable as conventional cropping systems (Mahoney et al., 2004; see Greene and Kremen, 2003, for reviews of other studies), yet experimental trials fail to compare the practices and yields experienced by producers in the field, including not accounting for the difficulty of marketing minor crops used in the cropping rotations (McBride and Greene, 2009b). Despite growth in organic farming, the impact of organic farm adoption on farm income and profitability is not clear. Previous literature on the economics of conservation practices and organic farming has assumed profit maximizing behavior of organic producers (Gary and Wilkinson, 1997; Honlonkou, 2004; Lichtenberg, 2004). …