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Supply and Demand Factors for Organic Produce
Author(s) -
Park Timothy A.,
Lohr Luanne
Publication year - 1996
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243282
Subject(s) - supply and demand , economics , consumer demand , agricultural economics , derived demand , partial equilibrium , microeconomics , demand curve , general equilibrium theory
Although the organic produce industry is growing dramatically, little is known about market structure. We estimate a system of reduced‐form equations to evaluate supply and demand factors that influence equilibrium farm price and quantity in wholesale markets for organic broccoli, carrots, and lettuce. In the long run, demand factors dominate supply factors. Reduced wholesaling costs, increased margins by which organic wholesale price exceeds nonorganic price, and higher consumer income stimulate both farm price and output. Increasing the nonorganic farm price decreases equilibrium quantity of organics. Market expansion strategies should target consumers and wholesalers.