CERTIFICATION AND SUPPLY RESPONSE IN THE ORGANIC LETTUCE MARKET

The impact of supply relationships and certification programs on the organic lettuce market is examined using an integrated partial adjustment and asymmetric supply reponse model. Costs associated with organic certification, production, and marketing have not restricted producers' abilities to respond to price signals. Organic growers allocate output between certified and noncertified markets in response to changing price premiums. Estimates of short-run supply elasticities indicate that organic lettuce growers are more responsive to price changes than producers of nonorganic lettuce. Long-run elasticity has increased since 1988, a change that coincides with the market entry of larger producers.