Source: USDA Amber Waves
By: Carolyn Dimitri and Lydia Oberholtzer

INTRODUCTION

Organic markets in the European Union member states and the U.S. are nearly the same size in terms of retail sales. At the same time, their farm sectors differ significantly, with the EU-15 member states having more organic farmland and more organic operations than the U.S. (see “EU and U.S. Organic Sectors”). The U.S. and EU Governments have also adopted markedly different policy approaches to the organic sector. The EU actively promotes the growth of the organic sector with a wide variety of policies designed to increase the amount of land farmed organically, including government standards and certification, conversion and support payments for organic farmers, targets for land under organic management, and policies supporting research, education, and marketing. The U.S. largely takes a free-market approach: its policies aim to facilitate market development through national standards and certification and federally funded grants that support research, education, and marketing for organic agriculture.

The policy approaches adopted by the two regions are the result of the inherently dissimilar perspectives and histories that the EU and U.S. governments have concerning agriculture, the environment, and by extension, organic agriculture. From the perspective of many EU countries, organic agriculture delivers environmental and social benefits to society, and is regarded as an infant industry requiring support until it is able to compete in established markets. This view of organic farming as a provider of public goods affords an economic rationale for government intervention in the market.

The U.S. Government’s approach, while acknowledging organic agriculture’s positive impact on environmental quality, treats the organic sector primarily as an expanding market opportunity for producers and regards organic food as a differentiated product available to consumers. In such cases, government-devised standards and labels facilitate market transactions and allay consumer concerns about product identity.

Full article in PDF format: http://www.ers.usda.gov/AmberWaves/February06/pdf/Feature1February2006.pdf