Do cost-reducing policies help or hurt organic systems? S31
Lohr, Luanne1; Salomonsson, Lennart2
1) Agricultural and Applied Economics, University of Georgia,Athens, Georgia, 30602-7509, U.S.A., 2) Crop Production Science, Box 7043, Swedish University of Agricultural Sciences, S-750 07 Uppsala, Sweden.
|It is generally accepted that cost-reducing
policies are helpful,and even necessary to encourage widespread adoption of organic
agriculture. However, as policies make it economically feasibleto convert more quickly to
organic systems, more individuals with strictly economic interests will participate.
Adoption of organic practices without a guiding philosophy of environmental, economic and
social enhancement may lead to an unsustainable agricultural system. Using cost-reducing
policies to expand organic markets has several implications. The entire system
(production, processing and distribution) will grow, generating more positive
environmental outcomes and providing wider access to organics for consumers, possibly at
lower prices. Participants' greater emphasis on monetary returns means that choices will
be dominated by economic factors. Under these conditions, environmental and social gains
will become secondary to monetary goals for many producers, rather than equally weighted.
Our objective is to examine the economic response of organic systems to cost-reducing
policies and to delineate sustainability implications. We investigate two national
policies - organic certification standards in the U.S. and subsidies for conversion to
organic practices in Sweden. For certification, we describethe economic basis for the U.S.
standard, and the expected outcomes of implementation. For the subsidy, we use an
econometric model to identify differences between farmers who converted to organic methods
after the subsidy and those who converted before to explain the effect of the subsidy. Our
conclusion is that, as implemented, these policies undermine sustainability goals.
Cost-minimizing farmers and processors will seek the least expensive certifier, typically
the one who sees that minimal standards are met, but does not promote stewardship nor
social goals. Without a subsidy, smaller scale and diversity in enterprises and product
outlets are important in conversion. With a subsidy, the focus shifts to external factors
- the payment, organic inspection quality and advice in conversion. Policy implementation
requires attention to sustainability goals.
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Organisation for Economic Co-Operation and Development (1993).Agricultural and Environmental Policy Integration: RecentProgress and New Directions, Paris.