Transaction Costs And Organic Marketing: Evidence From U.S. Organic Produce Farmers
We develop a conceptual framework that integrates quality of output and transaction costs in the choice of marketing channels. We estimate a reduced-form Tobit model and a semi-reduced logit model using a farm-level cross-sectional dataset to measure the effects of transaction costs in farming ability to make sales to indirect markets (retailers and wholesalers). We find strong empirical evidence that existing organic retail and wholesale markets impose considerable barriers to entry on individual organic farmers. The effects of transaction costs are asymmetric between farmers, those who transitioned from conventional farming and those who did not. Those who did are overall favored, and those who did not are constrained by more types of transaction costs and are constrained more severely than those who did. We argue that an effective policy should target the least favored farmers by encouraging or mandating distributors and retailers have a more transparent and objective process in selecting organic suppliers, such that all farmers would have an equal opportunity to be successful in selling to indirect markets.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jill E. Hobbs, 1997. "Measuring the Importance of Transaction Costs in Cattle Marketing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1083-1095.
- KS Pietola & AO Lansink, 2001. "Farmer response to policies promoting organic farming technologies in Finland," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 28(1), pages 1-15, March.
- Greene, Catherine R., 2001. "U.S. Organic Farming Emerges in the 1990s: Adoption of Certified Systems," Agricultural Information Bulletins 33777, United States Department of Agriculture, Economic Research Service.
- Bailey, DeeVon & Hunnicutt, Lynn, 2002. "The Role Of Transaction Costs In Market Selection: Market Selection In Commercial Feeder Cattle Operations," 2002 Annual meeting, July 28-31, Long Beach, CA 19894, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Rosett, Richard N & Nelson, Forrest D, 1975. "Estimation of the Two-Limit Probit Regression Model," Econometrica, Econometric Society, vol. 43(1), pages 141-46, January.
- Karen Klonsky & Laura Tourte, 1998. "Organic Agricultural Production in the United States: Debates and Directions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(5), pages 1119-1124.
- Lohr, Luanne & Gonzalez-Alvarez, Yassert & Graf, Anita, 2001. "Predicting Organic Market Development With Spatial Analysis Of Existing Industry Information," 2001 Annual meeting, August 5-8, Chicago, IL 20511, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Nelson, Forrest & Olson, Lawrence, 1978. "Specification and Estimation of a Simultaneous-Equation Model with Limited Dependent Variables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 695-709, October.
- Steven Were Omamo, 1998. "Transport Costs and Smallholder Cropping Choices: An Application to Siaya District, Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 116-123.
- Dimitri, Carolyn & Greene, Catherine R., 2002. "Recent Growth Patterns In The U.S. Organic Foods Market," Agricultural Information Bulletins 33715, United States Department of Agriculture, Economic Research Service.
- Lee, Lung-fei & Maddala, G S & Trost, R P, 1980. "Asymptotic Covariance Matrices of Two-Stage Probit and Two-Stage Tobit Methods for Simultaneous Equations Models with Selectivity," Econometrica, Econometric Society, vol. 48(2), pages 491-503, March.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea04:20386. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.