CERTIFICATION AND SUPPLY RESPONSE IN THE ORGANIC LETTUCE MARKET
By: Lohr, Luanne; Park, Timothy A.
Lohr, Luanne; Park, Timothy A., CERTIFICATION AND SUPPLY RESPONSE IN THE ORGANIC LETTUCE MARKET, Journal of Agricultural and Resource Economics, Volume 17, Issue 2, December 1992, Pages 253-265
The impact of supply relationships and certification programs on the organic lettuce market is examined using an integrated partial adjustment and asymmetric supply response model. Costs associated with organic certification, production, and marketing have not restricted producers' abilities to respond to price signals. Organic growers allocate output between certified and noncertified markets in response to changing price premiums. Estimates of short-run supply elasticities indicate that organic lettuce growers are more responsive to price changes than producers of nonorganic lettuce. Long-run elasticity has increased since 1988, a change that coincides with the market entry of larger producers.