A theory is proposed that explains the evolution of a market based on a quality variant as it goes from being a niche to the market norm. Organic commodities are described as such a quality variant and used to focus on the economic and policy issues that arise during a market's evolution. It is shown how organic products in general can become the norm in many American commodity markets. However, there is disagreement over whether it should and much uncertainty about whether it will. The current status of two organic markets is discussed to illustrate empirical issues. (JEL Q130, Q110, Q100)
California farmers have remained competitive in the global marketplace by using technology to reduce their costs and to expand production. Case studies of rice and processing tomatoes show that harvest mechanization has reduced labor use by 92% to 97% and has also reduced labor costs, down from half to twothirds of total costs to less than 20%. Mechanization is at least partly responsible for the steady increase In production of these two crops. Although mechanization has reduced the number of labor hours for harvesting, owerall employment for rice and processing tomatoes has risen due to increased production, and so have harvester operator wages. Further advances in tomato harwest technology will continue to reduce labor needs, while the rice industry will experience moderate changes.
There are a number of seemingly contradictory trends in the structure of American agriculture. For example, total revenues from agriculture in the United States continue to increase nearly every year, yet the total acreage of land in farms continues to decrease. This article presents an explanation using portfolio theory that is consistent both with the trends and with rational behavior of individual producers. The results have implications for commodity markets, land prices, and, in the long run, for the economic viability of American production agriculture.
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