SUPPLY-AND-DEMAND FACTORS FOR ORGANIC PRODUCE

Although the organic produce industry is growing dramatically, little is known about market structure. We estimate a system of reduced-form equations to evaluate supply and demand factors that influence equilib rium farm price and quantity in wholesale markets for organic broccoli , carrots, and lettuce. In the long run, demand factors dominate suppl y factors. Reduced wholesaling costs, increased margins by which organ ic wholesale price exceeds nonorganic price, and higher consumer incom e stimulate both farm price and output. Increasing the nonorganic farm price decreases equilibrium quantity of organics. Market expansion st rategies should target consumers and wholesalers.