Farmland Rental Rates: Does Organic Certification Matter?

Kate Binzen Fuller; Joseph P. Janzen; B. Munkhnasan

doi:10.3368/WPLE.97.1.030119-0032R2

Farmland Rental Rates: Does Organic Certification Matter?

Kate Binzen Fuller
, Joseph P. Janzen
, B. Munkhnasan

Agricultural and Consumer Economics

Research output: Contribution to journal › Article › peer-review

Abstract

We estimate U.S. organic farmers’ marginal willingness to pay to rent an acre of certified organic land relative to conventional farmland. Using a selection-on-observables design and farm-level data on farmland rental rates, organic status, and many conditioning variables, we address the role of profitability in mediating the effect of organic status. We find a 26% rental rate premium for organic farmland not driven by higher profits on organic farms. This premium is a modest incentive for landowners but a barrier for tenants to convert to organic farming practices, which may explain limited growth in U.S. organic acreage.

Original language	English (US)
Pages (from-to)	80-106
Number of pages	27
Journal	Land Economics
Volume	97
Issue number	1
DOIs	https://doi.org/10.3368/WPLE.97.1.030119-0032R2
State	Published - Feb 2021

ASJC Scopus subject areas

Environmental Science (miscellaneous)
Economics and Econometrics

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10.3368/WPLE.97.1.030119-0032R2

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title = "Farmland Rental Rates: Does Organic Certification Matter?",

abstract = "We estimate U.S. organic farmers{\textquoteright} marginal willingness to pay to rent an acre of certified organic land relative to conventional farmland. Using a selection-on-observables design and farm-level data on farmland rental rates, organic status, and many conditioning variables, we address the role of profitability in mediating the effect of organic status. We find a 26\% rental rate premium for organic farmland not driven by higher profits on organic farms. This premium is a modest incentive for landowners but a barrier for tenants to convert to organic farming practices, which may explain limited growth in U.S. organic acreage.",

author = "Fuller, \{Kate Binzen\} and Janzen, \{Joseph P.\} and B. Munkhnasan",

note = "Fuller and Janzen share lead authorship. The authors thank Jessie Bovay, Tim Delbridge, Iryna Demko, Jennifer Ifft, Andy Rahn, and seminar participants at Montana State University, the University of Illinois at Urbana-Champaign, the 2016 NC-1177 Meeting, the 2017 AAEA Annual Meeting, and the 2017 EAAE Congress for helpful comments on earlier versions of this article. This work was supported by U.S. Department of Agriculture Hatch/Multistate Project 1011710. Fuller and Janzen share lead authorship. The authors thank Jessie Bovay, Tim Delbridge, Iryna Demko, Jennifer Ifft, Andy Rahn, and seminar participants at Montana State University, the University of Illinois at Urbana- Champaign, the 2016 NC-1177 Meeting, the 2017 AAEA Annual Meeting, and the 2017 EAAE Congress for helpful comments on earlier versions of this article. This work was supported by U.S. Department of Agriculture Hatch/Multistate Project 1011710.",

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doi = "10.3368/WPLE.97.1.030119-0032R2",

language = "English (US)",

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Farmland Rental Rates: Does Organic Certification Matter?

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