Organic Food: Consumers’ Choices and Farmers’ Opportunities

200 Pages·2007·1.67 MB·English

by  Edi Defrancesco

ORGANIC FOOD
Consumers’ Choices and Farmers’ Opportunities
ORGANIC FOOD
Consumers’ Choices and Farmers’
Opportunities
Edited by
Maurizio Canavari
Alma Mater Studiorum-Università di Bologna
Bologna, Italy
and
Kent D. Olson
University of Minnesota
St. Paul, MN, USA
Maurizio Canavari Kent D. Olson
Dipartimento di Economia e Department of Applied Economics
Ingegneria Agrarie University of Minnesota
Alma Mater Studiorum-Università 1994 Buford Ave., 316 ClaOff
di Bologna St. Paul, Minnesota 55126
Viale Giuseppe Fanin, 50 USA
40127 Bologna
Italy
Library of Congress Control Number: 2006936935
ISBN-10: 0-387-39581-4 e-ISBN-10: 0-387-39582-2
ISBN-13: 978-0-387-39581-4 e-ISBN-13: 978-0-39582-1
Printed on acid-free paper.
©2007 Springer Science+Business Media, LLC
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PREFACE v
PREFACE
Organic Food: Consumers’ Choices
and Farmers’ Opportunities
1. MOTIVATION FOR BOOK
Consumers’ attention to food safety issues and environmental issues increased
overwhelmingly in recent decades, because of their increased concern about their own
health, the environment’s health, and the crises and emergencies reported worldwide.
Once the only option, organic agriculture has always been a production option followed
by at least a few farmers all over the world. These farmers were motivated by ethical
and environmental motivations, as well as by committed consumers who supported
organic agriculture thanks to a separate but fairly elitist distribution channel. After a
period in which the public intervention and financial support convinced an increasing
number of farmers to convert into organic farming, the niche slowly became a segment in
the agri-food industry.
Organic food has now become a viable alternative for an increasing number of
consumers. These consumers are worried about the presence of chemicals residues and
the negative consequences on the environment caused by intensive production methods.
Since organic food is presently available in the common marketing channels, along with
the conventional produce, consumers now have the freedom of choice between
organically and conventionally produced food.
Environment-friendly production methods, such as organic agriculture, represent a
way to meet society’s need for a lower-impact agriculture and to cater to a category of
consumers with particular preferences. Quality certification programs in both the European
Union and the United States are now available to certify that food has been produced
following specific, published, and accepted production methods.
Currently, a question of great relevance is whether organic farming is economically
sustainable. Do the farmers need public money to maintain their profitability even after the
conversion period? How many consumers are willing to pay more for buying organic food?
And how much more are they willing to pay? What kind of value do they assign to
organic agriculture and foodstuff?
v
vi PREFACE
This monograph contains several analyses that address these questions, use various
methodologies, and consider a wide range of specific situations and industries in the agri-
food sector, both in Italy and in the US. The focus is both on agricultural production and
on retail sales. It is aimed at giving an overview of the organic sector, both in Italy and
in the US, and to show how agricultural economists are performing analyses dealing with
organic produce on different points in the supply chain. The book structure is thought to
cope with economic issues raised by organic farming, taking into account the consumer's
needs but also the managerial and budget constraints experienced by the farmers. Farm
management methodologies, as well as marketing analyses have been applied to specific
research topics involving several industries in the agri-food sector. The papers strive
to answer questions that have a managerial relevance: e.g. are the producers ready to
adopt organic farming techniques, and are the consumers willing to pay a premium price
for a certified organic produce? In doing so, the book considers both the farmers’
opportunities and the consumers’ choices.
Most, but not all, of the contributions were presented during the 8th Padova-
Minnesota Conference on “Food, Agriculture, and the Environment”, held in Stout's
Lodge, Red Cedar Lake, Wisconsin, on August 26–28, 2002. Starting from that base, we
have added contributions that complement and expand the base and help achieve our
overall goal to improve our understanding of the demand and supply conditions for
organic food.
2. SECTOR OVERVIEWS
We start with two overviews of the organic sectors in our respective countries. Edi
Defrancesco and Luca Rossetto discuss the trends in and development in Italy in “From
Niche to Market Segment: The Growth of the Organic Business in Italy.” Catherine Greene
discusses the trends and developments in the United States in “An Overview of Organic
Agriculture in the United States.” Canavari, et al. provide a comparison of the financial
profitability and viability between our two countries in “A Comparative Profitability
Analysis of Organic and Conventional Farms in Emilia-Romagna and in Minnesota.”
3. FARMERS’ OPPORTUNITIES
Understanding the producer’s perspective is necessary in order to understand the
potential benefits, problems, and roadblocks that face producers and the opportunities they
have in participating in growing market. Knowing their perspective also allows us to
develop an understanding for potential growth and sustainablility of the supply of organic
food. The four chapters in this section of the book provide a good view from four very
different groups of producers: meat, crops, fruit, and wine. Based on a series of
interviews with them, Luigi Galleto examines the production and market situation and the
structural features and marketing strategies of organic meat producers in “Organic Meat in
Italy: Situation and Perspectives in Light of the Experience of a Small Group of Firms in
the Veneto Region.” Mahoney et al., use experimental results to analyze profitability
and risk for organic and conventional crop producers in “Profitability of Organic
Cropping Systems in Southwestern Minnesota.” Pirazzoli, et al. estimate and compare
the costs and profits of organic and integrated management strategies for fruit production
PREFACE vii
in Comparing the Profitability of Organic and Integrated Management peach growing in
Emilia-Romagna.” Luca Rossetto presents an overview of the organic wine market and
based on a survey of organic wine growers, discusses their farm structure, management,
profitability, technology use, market, and marketing strategies in his chapter, “Marketing
Strategies for Organic Wine Growers in the Veneto Region.”
4. CONSUMERS’ CHOICES
Consumers choose what they eat based on their own individual tastes and
preferences and the supply and price of products available in the market. To have a better
understanding of the market environment, we need to understand the potential level and
strength of the demand for a product just as we need to understand its supply situation.
In this section, we examine the demand conditions surrounding four very different
products and an overview of the organic market in the U.S. Edi Defrancesco discusses
the definition of standards for organic marine fish farming, production costs for organic
fish farming, and the potential demand for certified organic marine fish in “Potential
Demand for Organic Marine Fish in Italy.” Scarpa et al. report their statistical analysis
of survey data on consumers preferences for environmentally friendly production
methods in “Investigating Preferences for Environment Friendly Production Practices.”
Alessandro Corsi and Silvia Novelli evaluate the demand for organic beef using data
from a telephone survey in “Italian Consumers’ Preferences and Willingness to Pay for
Organic Beef.” Scarpa et al. use survey data in a contingent valuation methods (CVM) to
evaluate the demand for organic apples in “Willingness-to-Pay for Organically Grown
Apples Among Large Retail Customers.” Carolyn Dimitri and Luanne Lohr “The US
Consumer Perspective on Organic Foods.”
5. THE FUTURE
While these chapters and analyses provide a good picture of the organic opportinit-
ties at this time, we know conditions change, markets become more open, and new issues
develop. The organic food market is also a global market beyond Europe and the United
States. To complement the analyses in the earlier sections on specific product demand
and supply situations, Maurizio Canavari and Kent Olson discuss, from a broader pe-
rspective, an overall view of current events, trends, and important issues in the future in
their concluding chapters, “Recent Developments and Future Issues—Italy.” and “Recent
Developments and Future Issues—U.S.”
A limitation of the book is that even though a variety of issues and topics are taken
into consideration, not every possible aspect is covered; moreover, the approaches may
differ consistently according to authors’ background; finally the topic is hot not only on
an US-Italy perspective, but also at an EU level, and is gaining relevance also in
developing countries. The aim of this book was not to offer a comprehensive view on the
topic, but while its editing developed we recognized that there could be a need to do that
in the future.
Maurizio Canavari and Kent D. Olson
ACKNOWLEDGEMENTS ix
ACKNOWLEDGEMENTS
We wish to acknowledge and thank all the people who collaborated in organizing
and presenting papers during the 8th and the 9th Padova-Minnesota Conference on “Food,
Agriculture, and the Environment”, held in Stout’s Lodge, Red Cedar Lake, Wisconsin,
on August 26–28, 2002, and in Conegliano Veneto, Treviso, on August 28-September 1,
2004, for their encouragements and suggestions during the editing of this book. We also
thank the other authors who contributed to this book by adding their chapters for a more
complete picture of the US and Italy situation on organic food. We also acknowledge and
thank Riccardo Scarpa, who had the original idea for this book, for his continued
encouragement.
A special thanks to Springer’s editor Susan Safren, for her assistance in the editing
job and her patience in waiting the final manuscript to be ready.
This publication was partly funded and has benefited from research grants given by:
• the European Union (TH/Asia-Link/006, Contract no. 91–652)
• the Economic Research Service of the United States Department of Agriculture
• the Italian Ministry of Agriculture and Forestry Policies (DM no. 91566
29/12/2004)
• the Italian Ministry of Education, University, and Research (PRIN 2004—prot.
2004079383_002)
• the University of Minnesota
• the Alma Mater Studiorum-University of Bologna (RFO 2004, Progetti
pluriennali E.F. 2004).
ix
CONTENTS xi
CONTENTS
CONTRIBUTORS..…………………………………………………………………….xv
SECTOR’S OVERVIEW
FROM NICHE TO MARKET: THE GROWTH OF ORGANIC BUSINESS
IN ITALY ……………………………………………………………………………. 3
Edi Defrancesco and Luca Rossetto
1. Overview on Organic Market 3
2. The Bio-boom in Italy 5
3. Organic Farming in the Veneto Region: An Analysis Based on the 2000
Italian Census of Agriculture Data 10
4. References 16
AN OVERVIEW OF ORGANIC AGRICULTURE IN THE UNITED
STATES………………………………………………………………………………. 17
Catherine Greene
1. Introduction 17
2. U.S. Organic Standards and Certification 18
3. Economic Characteristics of the U.S. Organic Agriculture Sector 21
4. Recent State and Federal Policy Initiatives 26
5. References 27
THE PRODUCER’S PERSPECTIVE
A COMPARATIVE PROFITABILITY ANALYSIS OF ORGANIC AND
CONVENTIONAL FARMS IN EMILIA-ROMAGNA AND IN
MINNESOTA………………………………………………………………………… 31
Maurizio Canavari, Rino Ghelfi, Kent D. Olson, and Sergio Rivaroli
1. Introduction 31
2. Objectives and Hypotheses 33
3. Materials and Methods 33
4. Results and Discussion 36
xi
xii CONTENTS
5. Final Remarks 44
6. References 44
SITUATION AND PERSPECTIVES OF ORGANIC MEAT IN ITALY……….. 47
Luigi Galletto
1. Organic Meat Situation in Italy 47
2. Observations from a Small Sample of Venetian Firms Dealing with
Organic Meat 51
3. Concluding Remarks 59
4. References 63
PROFITABILITY OF ORGANIC CROPPING SYSTEMS IN
SOUTHWESTERN MINNESOTA………………………………………………… 65
Paul R. Mahoney, Kent D. Olson, Paul M. Porter, David R. Huggins, Catherine A.
Perillo, and R. Kent Crookston
1. Introduction 65
2. Background 66
3. Study Location and Design 67
4. Data Collection and Analysis Methods 68
5. Results 73
6. Conclusions 80
7. References 81
COMPARING THE PROFITABILITY OF ORGANIC AND INTEGRATED
CROP MANAGEMENT…………………………………………………………….. 83
Carlo Pirazzoli, Nicola Stanzani, Alessandro Palmieri, Roberta Centonze, and
Maurizio Canavari
1. Introduction 83
2. Materials and Methods 84
3. Results 85
4. Final Remarks 89
5. References 90
MARKETING STRATEGIES FOR ORGANIC WINE GROWERS IN
THE VENETO REGION……………………………………………………………. 93
Luca Rossetto
1. Wine from Organic Agriculture 94
2. Overview of the Organic Wine Market 95
3. The Organic Wine Market in Italy 96
4. A Survey on Organic Wine Market in the Veneto Region 98
5. Concluding Remarks 108
6. References 111