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The Influence of Local Selling Decisions on Organic Farm Incomes

Author

Listed:
  • Park Timothy A

    (USDA Economic Research Service)

  • Lohr Luanne

    (USDA Economic Research Service)

Abstract

This paper examines the factors that influence the earned income of organic farmers, given their decisions to engage in local selling. The model explicitly accounts for the sorting of producers across different levels of commitment to local sales on the basis of both observable and unobservable heterogeneity. The significant selectivity coefficients confirm that when producers choose to market organic products primarily through local outlets, earnings are overestimated (biased upward) if the selectivity corrections are neglected. Positive selection effects are present for farmers most intensively involved in local sales, contributing to higher earnings on average for these producers. After controlling for key farm and demographic characteristics, selling more locally suggests lower earnings for organic farmers.

Suggested Citation

  • Park Timothy A & Lohr Luanne, 2010. "The Influence of Local Selling Decisions on Organic Farm Incomes," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-21, September.
    • Handle: RePEc:bpj:bjafio:v:8:y:2010:i:1:n:6
    DOI: 10.2202/1542-0485.1303
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    as
    1. Park Timothy A & Lohr Luanne, 2010. "The Influence of Local Selling Decisions on Organic Farm Incomes," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-21, September.
    2. Kim Darby & Marvin T. Batte & Stan Ernst & Brian Roe, 2008. "Decomposing Local: A Conjoint Analysis of Locally Produced Foods," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 476-486.
    3. Kennedy, Peter E, 1981. "Estimation with Correctly Interpreted Dummy Variables in Semilogarithmic Equations [The Interpretation of Dummy Variables in Semilogarithmic Equations]," American Economic Review, American Economic Association, vol. 71(4), pages 801-801, September.
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    Cited by:

    1. Brian Lee & Jhih‐Yun Liu & Hung‐Hao Chang, 2020. "The choice of marketing channel and farm profitability: Empirical evidence from small farmers," Agribusiness, John Wiley & Sons, Ltd., vol. 36(3), pages 402-421, June.
    2. Enthoven, Laura & Van den Broeck, Goedele, 2021. "Local food systems: Reviewing two decades of research," Agricultural Systems, Elsevier, vol. 193(C).
    3. Pierre Chiaverina & Sophie Drogué & Florence Jacquet & Larry Lev & Robert King, 2023. "Does short food supply chain participation improve farm economic performance? A meta‐analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 54(3), pages 400-413, May.
    4. Bagi, Faqir Singh & Reeder, Richard, 2012. "Farm Activities Associated With Rural Development Initiatives," Economic Research Report 262232, United States Department of Agriculture, Economic Research Service.
    5. Park Timothy A & Lohr Luanne, 2010. "The Influence of Local Selling Decisions on Organic Farm Incomes," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-21, September.
    6. Park, Timothy A., 2015. "Direct Marketing and the Structure of Farm Sales: An Unconditional Quantile Regression Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), pages 1-19, May.
    7. Key, Nigel, . "Direct-to-Consumer Marketing and the Survival and Growth of Beginning Farms," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 49(01).
    8. Amanda Green & David Martin & Gracie Ghartey-Tagoe, 2018. "Is the College Farm Sustainable? A Case Study from Davidson College," Working Papers 18-01, Davidson College, Department of Economics, revised Jun 2020.

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    More about this item

    Keywords

    organic marketing; local food; selectivity bias; ordered probit;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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