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Widespread Adoption of Organic Agriculture in the US: Are Market-Driven Policies Enough?

  • Klonsky, Karen
  • Greene, Catherine R.

Organic food production has rapidly growing consumer demand in the U.S. and other industrialized countries, along with a worldwide regulatory framework and rapidly developing support infrastructure, making it a premier technology in the efforts of many public and private organizations that advocate more sustainable farming practices. The use of organic farming systems for crop production in the U.S. has grown rapidly during the last decade, but is still under 0.5 percent of total U.S. farmland-substantially less than in many countries in Europe and elsewhere. Within the U.S., conversion to organic farming systems has been more extensive in particular commodity sectors and regions. In California, for example, about two percent of the state's crop acreage is managed under organic farming systems, and over 15 percent of the dairies in some New England states are organic. The objectives of this paper are to examine commodity-sector and regional adoption rates and trends for organic farming systems in the U.S., and determine the impact of evolving markets and public support on adoption. First we will describe the current adoption and trends for the US and the world for organic production. Next we will examine current research on consumer attitudes towards organic products and the results of research trials comparing the risks and input requirements of organic versus conventional agriculture. In most cases organic producers rely on price premiums to offset the increased risks and production costs. We will discuss in detail market policies that directly and indirectly impact the profitability of organic production. We will then look at current conservation, commodity, and trade policies in the context of adoption of organic production. Finally, we will discuss organic production in the context of the next farm bill. The U.S. ranked fourth in land area managed under organic farming systems, behind Australia (with 24 million acres under organic management), Argentina (7.3 million acres), and Italy (3 million acres), in a recent worldwide survey. Argentina and Australia each had about 1.6 percent of their land area under organic management, much of that acreage in pasture. The U.S. was not among the top ten as a percentage of total farmland, which included Italy (8 percent), Sweden (5.2 percent), the Czech Republic (5 percent), and the United Kingdom (4 percent). Worldwide conversion levels are currently the highest in European Union countries, which have been developing consumer education initiatives and providing direct financial support to producers for conversion since the late 1980's to capture the environmental benefits of these systems and support rural development. Many EU countries have set targets for organic farming adoption of 10-20 percent of agricultural land area by 2010. National organic standards were implemented in the U.S. in 2002, and incorporate an ecological approach to farming that affects the entire system, unlike many new farming technologies-such as improved crop varieties and innovative yield monitoring tools-which typically alter only a single input or aspect of production. Farmers that transition to organic farming systems from chemical-intensive systems must make changes across the spectrum of their production inputs and practices. Strong market demand and organic price premiums have given some commodities comparable or higher whole-farm profits than conventional chemical-intensive systems in the U.S. In particular, the organic market is dominated by fresh fruit and vegetable production representing three fourths of retail organic sales. The fastest growing subsector is dairy resulting in correspondingly rapid growth in organic pasture and feed. In addition to relatively small market demand, the three year transition period required by USDA's organic regulations, the higher risks of shifting to a new way of farming, the steep learning curve, the high costs for fertility and weed management, and other obstacles have the limited conversion to organic farming systems for many commodities. USDA regulations require third party certification for growers grossing more than $5,000 in organic sales. Fees charged by State and private certifiers represent an additional, ongoing expense. By law certification agencies require a documentation of a 3-year transition (conversion) period, during which land must be managed with practices consistent to those required for organic certification, before certifying any crop or pasture acreage. Farmers cannot obtain organic price premiums during this period, though in some cases higher prices can be obtained for "transitional" commodities. Limited access to federal commodity programs due to the composition of the organic sector also presents obstacles for some farmers. A growing number of public and private groups have begun efforts to support more widespread adoption of organic agriculture in the U.S. Many groups support organic farming for multiple reasons-food safety, environmental protection, lower energy use, reduced use of pesticides are potential benefits to society from more widespread use of organic farming systems-and could justify financial or other assistance to farmers to adopt these practices. As the organic farm sector expands, some university-based research and technical assistance, federal cost-share funds, and other State and federal support for organic farmers is beginning to emerge. At the Federal level, at least nine USDA agencies have started or expanded programs and pilot projects to help organic producers with production and marketing problems and risks, and the 2002 Farm Act for the first time included several small initiatives to assist organic farmers. Organic farmers are now exempt from paying assessments to federal marketing orders. In September 2003, the National Association of State Departments of Agriculture released a policy statement supporting a number of policy measures to encourage conversion to organic farming systems, including targeted marketing assistance for small and medium-sized producers, expanded data collection, and improved government research coordination. While most of these state and Federal policy reflect a market facilitation policy orientation, one Federal program has been used to provide cost share payments to organic farmers to help pay for organic certification. And several States have begun subsidizing conversion to organic farming systems with conservation payments-using federal EQIP program funds-as a way to capture the environmental benefits of these systems. A new federal conservation program, the Conservation Security Program, may be especially important to organic producers when it is fully implemented, because it provides payments to producers for adopting or maintaining a wide range of management, vegetative, and land-based structural practices to address resource concerns, many of which organic farmers commonly adopt as part of their organic farming systems. Unlike most other Federal conservation programs, producers who grow specialty crops will be eligible to participate. The technical assistance features of the Conservation Security Program may be useful for organic farmers and those interested in transitioning to organic farming systems. Research and policy initiatives often play a key role in the adoption of new farming systems. Organic agriculture has attracted mainstream producers and processors in part due to the price premiums it has commanded and the rapid rate of growth at a time of stagnant or decreasing prices and flat growth in conventional agriculture. At the same time organic agriculture has the potential to achieve environmental goals. The details of the next farm bill with respect to conservation, trade assistance, research, and other policies will inevitably determine the size and scope of organic agriculture in the United States and the ability of organic agriculture to contribute to achieving environmental goals.

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File URL: http://purl.umn.edu/19382
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19382.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19382
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  1. Greene, Catherine R. & Kremen, Amy, 2003. "U.S. Organic Farming In 2000-2001: Adoption Of Certified Systems," Agricultural Information Bulletins 33769, United States Department of Agriculture, Economic Research Service.
  2. 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.
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