Does Organic Command a Premium When the Food is Already Local?

Abstract

The emergence of community supported agriculture (CSA) farms has received attention as a new way for small farms to remain competitive while engaging their local community through direct marketing. In this study, we report some of the first revealed preference valuation of CSA attributes using data on share prices and CSA characteristics for the summer 2011 season. Using data on the prices and attributes of 188 CSA farms spanning Ohio and Pennsylvania we use hedonic and nearest-neighbor covariate matching methods to uncover consumer valuations of CSA attributes including various types of organic certification. Results from a semi-log hedonic reveal a price premium of approximately 10% for USDA organic certification. In addition, we find no price premium associated with a competing organic certification program, suggesting that consumers are differentiating between types of organic certification in the local foods market. We also find a positive and statistically significant premium associated with longer seasons, delivery, and the provision of additional products beyond fruits and vegetables.

Keywords: Organic, Local foods, Matching, Hedonic, Community supported agriculture

JEL Classification: Q13, Q51