Agriculture and Human Values 21: 2735, 2004. 2004 Kluwer Academic Publishers. Printed in the Netherlands.

Expressing values in agricultural markets: An economic policy perspective

David S. ConnerDepartment of Applied Economics and Management, Cornell University, Ithaca, New York, USA

Accepted in revised form October 30, 2002

Abstract. Many mechanisms now exist for consumers to express progressive values in purchasing decisions.Although demand for such goods has grown, these goods remain the purview of small niche markets. Focusingon the market for agricultural goods (and the choice between the paradigms of industrialized versus sustainableagriculture), this paper discusses three major reasons (market failures, entry barriers, and biased policies) why it isdifficult for consumers to express their values for a more sustainable system in this way, and why policy change isneeded to create a fairer playing field. The current policy, voluntary labeling, is inadequate. A new set of policies,including taxes and subsidies to correct market failures, is needed to create opportunities for consumers to supportvalues such as health, community, and stewardship.

Key words: Consumer values, Market failures, Markets, Organic label, Policy, Sustainable agriculture

Abbreviations: SA Sustainable Agriculture; IA Industrialized Agriculture

David S. Conner, PhD, is a Research Associate in the Department of Applied Economics and Management,Cornell University. He is a member of the Emerging Markets Group and the Northeast Organic Network (NEON).His research interests include local organic agriculture, consumer education and preferences, experimental eco-nomics, and policy analysis. He was an organic farmer and farm manager in Pennsylvania before returning toacademia.

Introduction

In recent years, we have witnessed the growth oforganic and sustainable agriculture and other productsthat appeal to consumers values. Increasing numbersof consumers are purchasing products that are friendlyto the environment, produced without animal testing,return fair wages to workers and producers, etc. Labelstouting traits such as green, cruelty-free, fair trade,no child labor and reflecting other progressive valuesare common today. Voluntary labeling has become thede facto policy for the expression of such values in themarketplace; it is up to the consumer to seek out andpurchase goods with favorable traits, usually at greatersearch and monetary cost.

Despite its rapid growth over the last decade (up to20% per year, according to Dimitri and Greene, 2000),the market for organic and sustainable agricultureremains a niche market, quite small (about 2%) com-pared to the total sales of food (Dimitri and Greene,2000; Cook, 1999). We should be heartened by pastsuccess, yet far from satisfied: the majority of goodspurchased, in and out of agriculture, can usually safelybe assumed to have the lowest permissible environ-mental and social standards unless otherwise noted(Grossman, 1981). Many believe that globalization

has exacerbated this race to the bottom (e.g., Daly,1999). Lowering these standards in pursuit of com-petitiveness may be a good way to sell products in theglobal economy, but it is less effective in sustaining aplace where people would want to live. In days pastwhen most of what people bought was produced inones own village or region, information on how aproduct was produced was easy to come by and theimpacts would be felt much more immediately; thoseproducing in a dangerous or exploitative manner couldbe boycotted and shamed by their neighbors, and theproblem could be easily corrected. With the advent ofspecialization and integrated global economies domi-nated by trans-national corporations, information isharder to acquire, the impacts are less direct, and over-looking such breaches in values in exchange for a lowprice is much easier. This trend has brought both morechoice and more responsibility to the consumer, whomust trade off between lower price and higher ethicswithin a constrained budget.

This paper focuses on the market for sustainableagricultural (SA) products. It discusses questions suchas, why do so few people seem to express their valuesin the marketplace in this way? Why is it so difficult forsuch products to compete in the mainstream industrialfood markets? Are voluntary labeling initiatives, such

28 DAVID S. CONNER

as the organic label, the sufficient and proper mecha-nism to support the expression of these values? If not,what should be done and what are the likely outcomes?

Choices in the marketplace: Industrial versussustainable agriculture products

The recent history of agriculture in the US has largelybeen the story of its industrialization. Industrial agri-culture (IA) is marked by fewer, larger, highly mech-anized and specialized farms that are capital intensive,tend to emphasize monocultures of homogeneouscrops, are dependent on purchased inputs (particu-larly fossil fuel energy and chemicals like fertilizersand pesticides), and in general, attempt to use theseinputs to transform nature in order to create a favorablegrowing environment. Industrial farms are also increa-singly vertically integrated with input suppliers andmarketing services, often via contracts. The IA move-ment has achieved in large measure its goals of lowerfood prices and increased yields (Antle, 1999), but iswidely criticized for its neglect of the environment,community well-being, and local participation (Ikerd,1995).

One reason for IAs success to these policy endsis the underlying policy and property rights environ-ment, under which producers are able to externalizemany of the costs of this production and distributionsystem onto society as a whole. Its dominance of theagricultural scene is a product of research, extension,and education efforts and policies that have advocatedand rewarded the goals of increasing yield, efficiency,and profit (Strange, 1988 ). Since food is a commodityeveryone consumes every day, the pursuit of cheapfood via industrialization is a way to increase thebuying power of poor people (who tend to spend ahigher percentage of their income on food). This pro-cess is also widely seen as being a necessary precursorto industrialization in general, as it has freed laborto move out of farming into manufacturing, serviceprovision, etc.

In recent years, an alternative paradigm, the sus-tainable agriculture (SA) movement, has arisen in partas a response to criticism and skepticism of IA. Sus-tainable agriculture (SA) is defined by smaller farms,producing a diversity of heterogeneous niche out-puts; sustainable farms tend to recycle inputs, intern-alize costs, and, in general, use the producers knowl-edge of the complexities of the biological systemsto create a harmonious balance with, not dominionover, nature. The USDA defines sustainable agricul-ture as: an integrated system of plant and animalproduction practices having a site-specific applicationthat will, over the long term: satisfy human food

and fiber needs; enhance environmental quality andthe natural resource base upon which the agriculturaleconomy depends; make the most efficient use ofnonrenewable resources and on-farm resources andintegrate, where appropriate, natural biological cyclesand controls; sustain the economic viability of farmoperations; enhance the quality of life for farmers andsociety as a whole (Food, Agriculture, Conservation,and Trade Act of 1990). It is important to note thatthese depictions of IA and SA lie at the extreme endsof a continuum, with most if not all farms fallingin between the two. The division into two distinctparadigms is to illustrate critical choices we make asto the nature of our food system.

Consumers choose IA products in part because theyprefer those traits. However, as will be discussed ingreater detail below, SA faces many obstacles thatprevent its competing with IA in a fair race for theconsumers dollar. Furthermore, it is also not clear thatconsumers truly consider the full implications of theirpurchases when making decisions at the marketplace.The market fails to give consumers all of the infor-mation needed for a broader sense of the choice theyare making. The world would look very different ifconsumers primarily bought, as two extremes, wholefoods directly from a local organic family farmer asopposed to processed foods made with a variety ofimported ingredients grown on corporate, industrialfarms and delivered via grocery store channels. Butthis choice of worlds is not presented to consumers.Few if any would choose the degree of soil erosion,groundwater pollution, aquifer depletion, speciesextinction, fossil fuel consumption, rural communitydevastation, etc., that we have experienced with theadvent of IA. Yet, this is what the sum of millions indi-vidual decisions has created, despite good intentionsby farmers (who adopt potentially destructive IA prac-tices because they are in a vicious cycle of competi-tion) and universities/government agencies (who areonly now realizing the extent of the drawbacks of theseapplications).

Are our individual values really reflected in oursociety? Why do the sum effects of our economicdecisions result in outcomes that few would everchoose? In part, it is due to the peculiar way our societycompartmentalizes expression of values. Altruism andvision are expressed in church, donations to charities,and at the ballot box; but in the job and product mar-kets, we tend to look out for number one and pursueour narrow interests with little regard for the widerimplications of these actions on our fellow humansand our planet. Employers tell a worker soon to belaid off, its not personal, its just business, as ifthis excuses everything. We protest to try to blockWal-Mart from coming to our town and send let-

EXPRESSING VALUES IN AGRICULTURAL MARKETS 29

ters demanding human rights in China and Myanmar,then turn around and buy cheap sweatshop-producedtrinkets at these big box retail stores. The lower pricesand greater convenience lure us into supporting theseenterprises despite their questionable ethical standing.The burden is on the progressive producers to getconsumers to change their behavior and support them.Since these producers are numerous, often small andscattered (and already charging a higher price becausethey are paying a living wage, treating the environ-ment responsibly, etc.), it is difficult for them toorganize and get the message across. The market failsto give consumers all of the information needed tomake purchases with awareness of the consequencesand implicit tradeoffs, even those with the desire toexpress these values in their purchases.

As citizens of democratic nations with free marketeconomies, we have a great deal of power and respon-sibility, both as citizens and consumers. We are madeaware of our responsibility to vote and participatein political decision-making in civics class and withelection season commercials, yet rarely are we encour-aged to exercise our consumer power by guiding ourpurchasing decisions.

Even if consumers were conscientious and fullyinformed, the presence of a number of obstacles inthe market for SA products creates an unfair playingfield in favor of IA, making it difficult for consumersto express their values in the marketplace. A look ateach of these three types of obstacles market fail-ures, entry barriers, and pro-IA policies will guidea proposed policy environment that will address them.Perhaps such changes would not result in a greater rolefor SA: consumers may still choose IA products; but atleast we can be sure that the decisions were made on amore even-handed and informed basis.

Market failures in industrial agriculture

It is difficult to argue that the current system is truly theresult of the free market. However, a commonly toutedbenefit of IA is that it is efficient: hardened by the fireof competition for profits in the marketplace, the IAsystem has evolved as the winner of the survival ofthe fittest race. The efficiency of the market systemhas been touted by economists since Adam Smith.The fundamental welfare theorems of economics statethat a market economy is (Pareto) optimal and thatany desired efficient outcome can be achieved by themarket price system with lump sum transfers initiatedby the state (see e.g., Mas-Colel et al., 1995). However,the results of these theorems depend upon a number ofassumptions that are not always met: that all agentspay/receive the full cost/benefit for all goods, take

prices as given, and have perfect information. Whenthe first assumption is violated (when prices do notreflect true marginal social cost or benefit), econo-mists call this phenomenon an incomplete or missingmarket, or more commonly, a market failure. It isalso commonly understood that markets will fail toefficiently provide public goods. In the presence ofsuch market failures, policy intervention is needed toachieve the socially optimal state.1

Agriculture is rife with incomplete markets,providing public goods (such as environmental ser-vices, landscape aesthetics, biodiversity habitat, etc.)or imposing externalities without compensation. Suchcases have been commonly treated in the agricul-tural economics literature, much of it focusing onthe negative impacts of agriculture, particularly onthe environment (e.g., Hanley, 1991). (Prominentexamples include soil erosion, groundwater pollution,aquifer depletion, and loss of biodiversity.) The role ofagriculture in providing public goods is also a commontopic in the literature (see Hanley, 1991).

One often overlooked category of external costsinherent to modern agriculture is sociological orcommunity-based. Many observers believe that theindustrialization of agriculture (particularly the sub-stitution of capital for labor, leading to larger unitsof production and the resulting exodus from farmingof many families) has led to severe sociological andeconomic problems in rural towns. Heady (1975)describes the erosion of commercial activities inmerchandising, processing, and service sectors due tothe decrease in farming units and laborers, leadingto decaying rural communities (p. 7). Ginder et al.(1985) found a drop in agribusiness (i.e., handlersof inputs and outputs), retail, and service revenues.Rural communities have suffered from a deteriorationof social life, loss of young leaders, and declining taxrevenues for schools and health and social services dueto the loss of farms and farm families (Heffernan andHeffernan, 1986). Although the well-publicized farmcrisis may be over, forced exit from farming continuesand rural communities continue to search for identity(Ikerd, 1999b).

Ikerd (2002) argues that the get big or get outmentality of IA has further detrimental effect on ruralcommunities: it is difficult to love thy neighborwhen one of you must fail, when your own survivaldepends on acquiring the neighbors bankrupt farm.Goldschmidt (1978) reports that communities with alarger number of operator-owned farms have healthiersocial institutions than communities with fewer, largerfarms staffed by hired labor. Heffernan and Heffernan(1986) also state that individuals have experiencedgreater depression, substance abuse, mental illness,and an increased reliance on food stamps, Medicaid,

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etc. as a result of the farm crisis. Strange (1988) andIkerd (1999ac) echo these observations.

It is important to note that none of these effectsis deliberate or intended; it is a fact of externali-ties that such consequences arise because of actionstaken by agents that are perceived to be in his orher interests. Given the economic situation they face,these agents are merely responding to it, externa-lizing whichever costs they can (or more precisely,ignoring these external costs). The changes in agricul-ture have exacerbated this situation: the transition froma closed-loop model of agriculture (where farmersused on-farm inputs and marketed their wares within asmall geographic area) to a open-loop model (featuringinputs purchased off-farm and food sold throughoutthe world) has led to an increase in externalities dueto a greater opportunity for the export of pollutants(Heady, 1975). Any critique of modern agriculturemust address these environmental and sociologicaleffects.

In addition to external costs and public good provi-sion, other types of market failures are also associatedwith IA and its heavy use of agri-chemicals. Pimentelet al. (1991) and Lewis et al. (1997), state that inthe aggregate, pesticide use leaves growers no betteroff (in terms of crop loss due to pests) despite thedirect costs of purchase and application and all theindirect cost mentioned above. Several caveats shouldbe mentioned. Pimentel et al. (1991) state a numberof reasons that account for this phenomenon: highercosmetic standards have raised the bar of what is toodamaged to be salable; pesticide use has supplantedmany sanitary and cultivation practices once used tocontrol pests. However, much of this can be explainedby pesticide resistance and bioaccumulation in pestsenemies. Lewis et al. (1997) refer to these phenomenaas fundamental consequences of reliance on inter-ventions that are both disruptive and of diminishingvalue because of countermoves of ecological systems(p. 12245). Resistance to pesticides is seen as a graveproblem, rendering many of them ineffective (Antle,1988; Committee on Strategies for the Management ofPesticide Resistant Pest Populations, 1986).

If an individual farmer (or even everyone all atonce) would stop spraying the immediate results wouldlikely be devastating: without predators (and sinceplants with pest resistance have not been naturallyselected for and natural soil fertility is so poor),pests would eat and destroy crops virtually unchecked.The ecosystem is so compromised that natural checkswould likely be ineffective, especially in the shortrun.

Suppose for the sake of argument that given a returnto cultural and sanitary practices, former cosmeticstandards and a balanced ecosystem, crop losses would

be equal to current losses (with widespread use ofpesticides) (Pimentel et al. (1993) have found that 1225% of all pesticide treatment costs are due to counter-acting resistance, and that 50% of pest control is dueto natural enemies, 40% due to natural resistance, andonly 10% to pesticide use, so this is a somewhat plau-sible claim). Even so, a sort of prisoners dilemmaarises. Cooperating farmers could agree not to sprayand, in the long run, all be better off (get the sameyields without the cost of buying and applying pesti-cides). However, even if this was achieved, it is not astable equilibrium; everyone has the incentive to cheat:each could wipe out the now susceptible pests from hisown plots, and have even higher yields until the preda-tors began to die and the pests developed resistanceagain (assuming the revenue gained from spraying isgreater than the cost).

Without knowledge of the long-term implications,it makes sense why farmers began to use pesticidesin the first place: the bounce in production in earlyyears of use. But continued use has led to a treadmilleffect in which now they have had to spray ever-increasing amounts of (and/or more potent) toxins tojust to keep from losing ground. Even biotechnologyspromise of reduced pesticide use has been questioned(Benbrook, 2001).

Another classical economic phenomenon is at workas well: the tragedy of the commons. The use ofpesticides as a last resort to prevent complete or devas-tating crop loss is a sort of commons. Every time anindividual in a given area uses a pesticide, it increasesthe rate at which pests will become tolerant to it(decreases the pests susceptibility). Even responsibleuse decreases the effectiveness of the toxin both for herand for her neighbors; overuse accelerates resistance.The marginal return to using the toxin diminishes.Yet in economic theory (and usually in practice), thefarmer will continue the practice as long as the returnto him (the average revenue product) is at or abovethe cost of the toxin. As with the examples from eco-nomic theory (e.g., open access fishing or mining)the result is that the commons is depleted and is notefficiently utilized. Assigning property rights or other-wise restricting access to the commons is the familiarremedy to achieve efficient resource allocation.

It is clear that current pesticide regulations failto address these market failures. The external costs,discussed above, as well as the prisoners dilemmaand commons aspects, lead to the conclusion that alaissez-faire policy will not result in an optimal alloc-ation of resources. The use of agri-chemicals is akey component of IA: it greatly decreases the eyesto acres ratio needed to manage pests, and permitsmonocultures and cultivation of soil poorer nutrientand organic matter. With producers allowed to extern-

EXPRESSING VALUES IN AGRICULTURAL MARKETS 31

alize so many costs, it is not surprising that the IAsystem has emerged victorious from market competi-tion. It is time to rethink the meaning of efficiency andprofitability.

Entry barriers for SA products

Many consumers wish to purchase food that reflectsa more sustainable and equitable food system, butit is difficult for them to articulate their preferencesin the marketplace. The Hartman Group states thatmany consumers would be willing to buy more organicproduce if it was available in stores they currentlypatronize. Products from industrialized organic farmsare increasingly found in mainstream grocery stores(Dimitri and Greene, 2000). But producers of localsustainable food products lack access into the main-stream food distribution channels; often the scale andseasonality of farms (like those here in the Northeast)precludes their ability to provide ample, year roundquantities to supply large wholesalers or retailers.(Many growers I have personally interviewed mentionthis as a problem they encounter.) Furthermore, thesystem is currently arranged for the transport of foodsimported from other regions (especially California) tothe Northeast, creating a food chain fixity obstaclefor small northeast farms. Calvin et al. (2001) discussthe burdens that required services and fees increa-singly place on small shippers, producers, etc. Largeindustrialized organic farms will be able to compete,but smaller sustainable farms (that reflect the broaderissues of sustainability like local control and participa-tion) are often squeezed out of the mainstream market(see Dimitri and Richman, 2000). This implies thateven though both supply and demand for such productsexist, a lack of coordination and opportunity preventsconsumers from voting with their dollars, and trans-lating their preference for a sustainable food systeminto purchases that support this type of system.

Current policy environment

In addition to the avoidance of external costs, IA reapsfurther advantage from a wide array of policies. Dahl-berg discusses how the industrialization of agriculture,in which pesticide use has played a great part, isbased on functional specialization and the productionparadigm, a reductionist approach that tends to ignoreharmful side effects and encourage the externalizationof costs wherever possible. Economic productivity hasbecome the sole evaluative criterion of agriculturalproduction; other considerations, such as environ-mental stewardship, community wellbeing, and public

health enter the equation as an afterthought if at all.The result, Dahlberg (1993) states, is to encouragethe use of pesticides in agriculture and forestry inthe name of economic growth. This pattern reflectsthe predominant power in most states of corporateand special interests which encourage pesticide use(p. 286). Control, price support, and income supportpolicies have also encouraged industrialization andgreater pesticide use (Dahlberg, 1993; Jennings, 1991;Osteen, 1993). The increased funding of research atLand Grant Universities by chemical firms has led toan increase in emphasis on applied science such asbiotechnology at the expense of basic science like eco-logy and taxonomy, creating conflicts of interest forthese institutions (Dahlberg, 1993). Only 0.02%, or151 acres of the 885,863 available research acres inthe land grant system, is devoted to certified organicresearch (Sooby, 2001). The land grant systems insti-tutionalized focus on chemical inputs and geneticallymodified organisms has marginalized, if not outrightexcluded, many other areas of inquiry, most spe-cifically organic production, said OFRFs ExecutiveDirector Bob Scowcroft (Sooby, 2001). To be fair,USDA has increased funding to and emphasis uponorganic and sustainable agriculture in recent years, butthese efforts still pale in magnitude to commodity pay-ments and in influence with decades of support for theIA paradigm.

The de facto measure currently in place is the useof information to differentiate products that positivelycontribute to these issues. It is left to the consumerto voluntarily support firms that minimize negativeexternalities, maximize the provision of public goods,or otherwise reflect her concerns or values. Van derHamsvoort and Lusjt (1995) state that the ideal farmproduct would be profitable, be demanded by con-sumers, and have no external costs, and propose thesale of landscape amenities as fitting that description.Marketing schemes such as U-pick, farm stands, andcommunity supported agriculture (subscription farms)are examples of ways in which farmers provide arural experience and connection with the farm in thepackage along with the food, helping to create whatLyson calls Civic Agriculture.

Certainly, the organic label is the most recogniz-able voluntary labeling example. But is it truly a proxyfor SA? The information on the label is restricted tohow the food was produced, and at best is a proxy forthe on farm environmental impacts of production. Itprovides no information on how the producer treatshis or her labor force, how many miles the food hastraveled, how the farm contributes to the communityand local economy, etc. In short, it addresses onlypart of one leg of the SA stool, while leavingthe other two untouched. It does nothing to address

32 DAVID S. CONNER

the corporatization and consolidation of the foodsystem (concerns mentioned by surveyed organic con-sumers). One can easily envision a farm that is organicbut not sustainable, and vice versa. To give extremecases, a mono-cropped farm that substitutes organicfor chemical inputs and trucks its produce across thecontinent would meet few criteria for sustainability.A dairy farm that relies on rotational grazing andserves local markets but treats sick cows with anti-biotics cannot sell the milk as organic but would bewidely considered sustainable. The organic label maybe the best signal for SA available, but consumersneed more information and incentive to direct theirpurchases toward sustainability.

Proposed policy environment

Even if the organic label was a perfect proxy forSA, voluntary labeling is not sufficient to addressthe market failures, entry barriers, and biases ofcurrent policy mentioned above: some regulation isneeded as well. Humans are often thought to bebounded rational (Teisl and Roe): we face cog-nitive and time as well as budget constraints in ourdecisions. Caswell and Padberg note that groceryshopping logistics limit the potential for significant useof label information in making purchase decisions,pertaining to health (p. 462). The use of labels and pur-chasing decisions to shape social and environmentaloutcomes is likely to be even more limited, sincehealth decisions have a direct impact on the consumerwhereas social/ecological decisions are less direct inimpact and subject to public good/free rider issues.Regulation has its own set of benefits and costs: theycan prevent bad outcomes with more certainty thanvoluntary labeling and can induce innovation; how-ever, they may be costly (both to implement andenforce), limit freedom of action, etc.

Hadden (1986) posits five criteria in judging whichtype of intervention (information versus regulation)is best, depending on the risks involved. When therisk and benefits are borne by the same person (e.g.,medicine), information is called for; when differentpeople bear it (e.g., pollution), regulation is needed.When the risks and benefits are of the same nature(medicine poses both health risks and benefits), labelsare best; when theyre different (the cost of sicknessand death vs. money profits), regulation is called for.Risks that are short term, reversible, controllable bythe consumer, and have a clear causal connection tothe product are best managed by information. Risksthat are long-term, irreversible, difficult to control, andhave a complex causal relationship should be managedby regulation.

What are the risks involved with industrial agricul-ture and pesticide use? Certainly, they include ecolo-gical risks such as soil erosion, aquifer depletion, lossof biodiversity, and global warming and sociologicalrisks like the breakdown of rural communities. Healthrisks include pesticide residues on food and in water,mad cow disease, etc. While it can be argued thatboth consumers and producers benefit (higher profits,lower food costs), the benefits are very different, andthe hazards are long-term, irreversible, difficult to con-trol, and have a complex causal relationship. By thesecriteria, regulation is needed.

The proposed policy environment is centered uponproviding greater information to consumers, alongwith measures that will overcome the obstacles dis-cussed above. It can be considered a utopian oridealized proposal, as many of its measures wouldbe politically difficult to implement and/or violateregulations of the World Trade Organization.

Voluntary labeling schemes can provide signals toconcerned consumers that some of the externalizedcosts of IA are being addressed. For example, when aconsumer buys organic, they are also indirectly buyingcleaner groundwater, biodiversity habitat, improvedsoil structure, etc. Similarly, buying locally grownfood supports cleaner air and an improved local eco-nomy.

The organic label is an important ingredient for amore sustainable food and agriculture system, but itis not enough. Steps must be taken to improve theorganic labels ability to contribute to a SA system,but other measures are needed as well. First, educa-tion is needed to inform consumers about the benefitsof organic/sustainable and drawbacks of conventional.Adult education theorists like Knowles (1978) statethat adults learn best when the information is perceivedas pertinent to their lives. Public campaigns shoulddraw the links between food choice and health, com-munity, environment, etc., emphasizing their relevanceto citizens perceived problems. Many people, evenconsumers of organic food, do not even know whatorganic means (Conner and Christy, 2002). Compe-titive markets only function with informed agents, sogovernment must intervene to educate consumers andprovide institutional support. Nutrition education andhome economics extension efforts should include les-sons on the links between purchase choices and theissues above. Generic advertising of organics, perhapsfunded by USDA certification fees, would boost publicawareness and confidence in the organic label. Suchefforts have proven to be effective for many commodi-ties like beef, milk, etc. Growers, processors, otheragents in the sustainable supply chain and other mem-bers of the SA movement must do a better job ofcommunicating with consumers. Greater cooperation

EXPRESSING VALUES IN AGRICULTURAL MARKETS 33

and pooling of resources would help with this task.More articles about SA should be written for wideraudience publications rather than preaching to thechoir in journals such as this one.

Other voluntary labeling categories, such as con-tribution to community and local economy, should beenacted. Exact definitions of qualifications (e.g., fairtreatment and wages to workers, multiplier effects ofinputs and outputs, local ownership and control, etc.)and means of certification need to be designed.

Unfortunately, even with perfect information aboutwhere and how things are produced, many consumerswill choose only by the criteria of low price, maximumconvenience, brands they see advertised, etc., not byhow their purchases impact their world. Many of thesefactors can be addressed by removing the obstacles SAfaces.

Economics literature contains many proposedmeans of addressing market failures. One commonmeasure designed to bring about the optimal level ofuse in the presence of externalities is the Pigouviantax, which equals the difference between the marginalutility and marginal cost at the socially optimum level.Input use or output can be subject to a quota. Somesubstances or practices have been banned outright(e.g., DDT). Other traditional approaches discussed inthe literature include design standards (direct com-mand and control regulation of the process), perfor-mance standards (e.g., maximum allowable effluent),and fungible permits to discharge a given level ofpollutant (Shortle and Dunn, 1991).

Given their detriment to the environment and pos-sibly human health, pesticides and chemical fertilizersought to be taxed. If possible, these taxes shouldequal their marginal social cost (i.e., a Pigouvian tax).Policies outlined above that encourage pesticide useand bad stewardship ought to be amended or elimin-ated. In particular, commodity programs, intended tokeep families on farms but having quite the oppositeeffect, ought to be rethought. Direct green payments(payments to growers to compensate for and encouragethem to implement improved environmental practiceson the farm), decoupled from production to preventmarket distortion, ought to be implemented to com-pensate farmers for public goods they provide. Further-more, public funding for research in SA productionand marketing at Land Grant Universities should beincreased, moderating the influence of corporate forceson the public research agenda.

Market failures arising from food miles (i.e., theexternal costs of fossil fuel use in transport) need to beaddressed as well. Food items should be labeled as tothe place of origin of each ingredient, plus a measureof the aggregate food miles they have traveled, accom-panied by an education campaign on the effects of

buying food from far away locations. A more extremesolution is a tax/subsidy scheme at the retail level,where foods grown in far away places are taxed asa function of distance traveled, and the revenue usedto subsidize local foods. (This can be done withnon-foods as well.) This would also help to free upresources in the developing south, in which the bestland and resources are used to grow export crops forthe wealthy world while their own populations go hun-gry. Most of the worlds hungriest nations export vastquantities of food. A shift in demand away from thoseluxury crops in the US would be a disincentive for thisinequitable land use (Moore-Lappe et al., 1998).

Market access for local sustainable/organic foodproducts must be ensured. In recognition of thesocial, economic, and environmental spillover bene-fits, preferential access for these producers should bemandated. Public research institutions such as LandGrant Universities must place a priority upon ensuringmarket access to these growers; potential solutionssuch as the establishment of growers cooperativesshould be researched, developed, and tested.

Conclusions

The history of US agriculture has largely been oneof industrialization, a process under which farms areencouraged to externalize as many costs as they canonto the public at large, with profits and a narrow defi-nition of efficiency the guiding principles. Yet despiteits successes, so much has been lost and sacrificed tothis paradigm: the social, environmental, and healthcosts, both here and abroad, have been staggering.

What sorts of benefits would likely arise from agreater role for SA? In addition to healthier com-munities and environment, and greater confidence inour ability to continue to feed ourselves into the future,this transition would also decrease what Kneen (1993)calls the distancing of people from their food. Peoplewould have a greater connection to the way their foodcomes to them, and be more aware of and less tole-rant of all the unwanted side effects of IA. Finally, itmay even begin the movement to a more sustainablesociety in general, where materialism and heedless-ness are replaced by community-based values andresponsibility.

Many things in life are intrinsically worthwhilewithout being profitable or efficient. Just because themarket determines some outcome does not mean wehave to live with it. As Shafer (1969) reminds us,the outcomes of market economies are determined bya large number of institutions and arrangements thatevolve without consideration of their broader effectson the system as a whole. A local sustainable food

34 DAVID S. CONNER

system whose primary purpose is to provide ourselveswith healthy food, today and in the long run, may notmeet the narrow criteria our current paradigm extols;yet even the most casual glance at the way we feedand take care of our land ourselves is enough to showhow badly the current system is doing. The greatestpotential costs of SA higher food costs and decreasedyields can be addressed by income transfers to thepoor (until wages adjust upward without the illusionof cheap fossil fuels) and increased research into SAproduction.

The organic label is a good first step, but muchremains to be done. An integrated approach, based onvalues such as health, community, and stewardship,is needed. The USDA, Land Grant institutions, localpublic, and private sectors all have roles to play. Theother option is a race to see if technology can save usfrom all the ills it has created. Do we want to rely onthe fox to save us chickens?

Note

1. A discussion on the merits of the underlying economicassumptions of utilitarianism and the exogeneity of prefer-ences is beyond the scope of this paper. My arguments arewithin the context of the current paradigm of economicthought.

References

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Address for correspondence: David S. Conner, Department ofApplied Economics and Management, Cornell University, 206Warren Hall, Ithaca, NY 14853, USAPhone: +1-607-255-5464; Fax: +1-607-255-9984;E-mail: dsc17@cornell.edu