The Organic Label: How To Reconcile Its Meaning With Consumer Preferences

The USDA's National Organic Program (NOP), with its unified definition and labeling requirements, holds great promise for increasing commerce in and decreasing transaction costs associated with purchasing organic food. However, the label and its meaning must both be well understood and reflect the traits consumers want if this promise is to be realized. This paper reports the results of a survey and experimental auction on consumers' preferences for organic standards. On one hand, the USDA NOP's Final Rule broadly conforms to consumer preferences regarding what practices should or should not be permitted in organic production and processing. Consumers support a strict definition of organic in general, opposing the use of a variety of practices historically banned by organic certifiers. For example, both the survey and auction methods found that consumers support the banning of Genetically Modified Organisms in organic food and are willing to pay a premium to avoid them. Consumers are also in accord with the Final Rule's exclusion of irradiation, biosolids, growth regulators, etc. On the other hand, the survey and auction results reveal a lack of understanding of the label's meaning as well as a disconnect between the label's function (detailing acceptable production practices) and consumers' stated motivations for buying organic (e.g., support for a local sustainable food system). Implications of these findings for decision makers in policy and industry are discussed. Of particular focus will be the role of these agents in promoting products that allow consumers to purchase items that reflect and support these values.