Are Organic Farmers Really Better Off Than Conventional Farmers?

We employed the propensity score matching and estimated the causal effect of being certified organic crop producers on farm household income and its various components in the United States. Contrary to the standard assumption in economic analysis, certified organic farmers do not earn significantly higher household income than conventional farmers. Certified organic crop producers earn higher revenue but they incur higher production expenses. In particular, certified organic producers spend significantly more on labor expenses, insurance payments, and marketing charges than conventional farmers. The results suggest that early adopters of organic farmers have done so for non pecuniary reasons and the lack of economic incentives can be an important barrier to conversion to organic farming in the United States.