The Influence of Local Selling Decisions on Organic Farm Incomes

This paper examines the factors that influence the earned income of organic farmers, given their decisions to engage in local selling. The model explicitly accounts for the sorting of producers across different levels of commitment to local sales on the basis of both observable and unobservable heterogeneity. The significant selectivity coefficients confirm that when producers choose to market organic products primarily through local outlets, earnings are overestimated (biased upward) if the selectivity corrections are neglected. Positive selection effects are present for farmers most intensively involved in local sales, contributing to higher earnings on average for these producers. After controlling for key farm and demographic characteristics, selling more locally suggests lower earnings for organic farmers.