Certified organic food production, financial performance, and farm size: An unconditional quantile regression approach

Abstract

Demand for organically produced foods continues to show double-digit growth. However, production of certified organic food in the US has lagged significantly. Hence it provides tremendous scope as well as a challenge for the U.S. organic food production (OFP) sector. This study investigates the impact of farmer’s participation in certified OFP on farm financial performance. Using a 2012 nationwide farm-level survey and an unconditional quantile regression (UQR) approach, we find a significant heterogeneous effect of certified OFP across quantiles of farm financial performance measures (i.e., total sales and net cash farm income). Findings show that participation in certified OFP is positive and varies across the unconditional total sales quantile. The marginal impact of participation in certified OFP is higher for farms generating higher sales and net cash income, top three quantiles (75th and up). However, small farms tend to benefit from participation in certified OFP when we use farm sales as performance measure. Finally, UQR estimates show that gender of the operator, off-farm work, marketing contracts, and direct-to-consumer sales have a significant impact on farm financial performance.