Consumer Effects of Harmonizing International Standards for Trade in Organic Foods
Worldwide markets for organic foods are expanding, with annual growth rates of 5 to 30 percent in the European Union (EU), the United States, and Japan for more than five years. Using 1997 sales data and annual growth rates from the International Trade Centre (ITC 1999), and assuming a linear trend, projected market size in 2010 will be at least $46 billion in the EU, $45 billion in the United States, and $11 billion in Japan. As many as 20 to 30 percent of consumers surveyed in Europe, North America, and Japan claim to purchase organic foods on a regular basis (Lohr 1998a). Yet “organic” does not mean the same thing to all these consumers, because organic food production and processing standards are not harmonized across countries. Certifiers of organic food production, processing, and handling use different rules according to regulatory, philosophical, and technical goals. This research compares the trade and welfare implications of harmonizing international standards for organic food certification with the status quo market response to differential standards.
KeywordsEuropean Union Equilibrium Price Consumer Surplus Organic Food Domestic Price
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