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Conversion subsidies for organic production: results from Sweden and lessons for the United States

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  • Lohr, Luanne
  • Salomonsson, Lennart

Abstract

Environmental and social justifications for organic conversion subsidies are as pervasive in the United States as in Europe, but national policy does not explicitly support organic agriculture. Using Sweden's experience, we analyze factors that affect whether a subsidy is required to motivate organic conversion. We use a utility difference model to compare farmers who converted before and after the subsidy. Significant factors in conversion without subsidies are greater livestock diversity and more sales outlets. Farmers requiring subsidies manage larger farms, are more concerned with organic inspection quality and adequacy of technical advice, and reside in areas with more organic farms. Results suggest that a subsidy induces mainly those already inclined toward organic agriculture to convert. Limited exposure to organic systems and a marketing and technical information infrastructure designed to support conventional agriculture restrict the potential effect of a conversion subsidy in the United States.
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  • Lohr, Luanne & Salomonsson, Lennart, 2000. "Conversion subsidies for organic production: results from Sweden and lessons for the United States," Agricultural Economics, Blackwell, vol. 22(2), pages 133-146, March.
    • Handle: RePEc:eee:agecon:v:22:y:2000:i:2:p:133-146
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    1. Hanemann, W., 1994. "Contingent Valuation and Economics," CUDARE Working Papers 198636, University of California, Berkeley, Department of Agricultural and Resource Economics.
    2. Cragg, Michael & Kahn, Matthew, 1997. "New Estimates of Climate Demand: Evidence from Location Choice," Journal of Urban Economics, Elsevier, vol. 42(2), pages 261-284, September.
    3. W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
    4. Cook, Roberta L., 1988. "Marketing organic commodities in California: Structure and obstacles to expansion," Western Economic Association Conference Archive 291727, Western Economic Association.
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