The economics of the organic food system: Discussion

Filling an entire shopping basket implies that the store choice decision is made in anticipation of the utility provided from ultimately consuming goods from multiple categories. Hsieh and Stiegert avoid the empirical issues that are involved in modeling multi-category choice by considering only two :milk and eggs. Because consumers are increasingly demanding foods produced locally, whether for environment, health, safety or political reasons, the opportunities for significant premiums seem readily apparent. Interestingly, however, the data show that larger, more established, and presumably more sophisticated organic growers are less likely to take advantage of local channels. As larger retailers and restaurant chains compete to source top-quality organic produce, it seems logical that their first alternative would be to find suppliers that can provide a larger share of their needs. However, this deprives the local channel of what may be the best quality organic goods.