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Farmland Rental Rates: Does Organic Certification Matter?

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Listed:
  • Kate Binzen Fuller
  • Joseph P. Janzen
  • B. Munkhnasan

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.

Suggested Citation

  • Kate Binzen Fuller & Joseph P. Janzen & B. Munkhnasan, 2021. "Farmland Rental Rates: Does Organic Certification Matter?," Land Economics, University of Wisconsin Press, vol. 97(1), pages 80-106.
    • Handle: RePEc:uwp:landec:v:97:y:2021:i:1:p:80-106
    Note: DOI: 10.3368/wple.97.1.030119-0032R2
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    Cited by:

    1. Seifert, Stefan & Hüttel, Silke & Werwatz, Axel, 2023. "Organic cultivation and farmland prices: Does certification matter?," FORLand Working Papers 28 (2023), Humboldt University Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets – Efficiency and Regulation".
    2. Veron, Emilien, 2022. "Comparative analysis of revenue and land prices between organic and conventional farming," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 320734, Agricultural Economics Society - AES.
    3. Eric J. Belasco & Kate Binzen Fuller, 2022. "Who buys crop insurance? Predictors of the participation gap between organic and conventional farms," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1554-1572, September.

    More about this item

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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