One might expect that certification bodies, such as CCOF and QAI, would lose revenues because of the reduction in the size of their international certification programs, but Jaclyn Bowen, General Manager of QAI, said that she expects to see a net gain for the company because these changes will enable them to focus on more important industry issues. Concerns Though the public reception of the agreement has been mostly positive, there are critics who worry that this will lead to the erosion of animal rights in the European Union because the U.S. organic program has much less strict animal rights regulations. Also, the criticism could be leveled that all such Equivalence Agreements are inappropriate because national organic standards reflect the preferences of consumers in those countries, so harmonization of standards could lead to a decline in consumer utility. However, a study by Sawyer et al. compared the preferences of consumers in the U.S., UK and Canada, through surveys in which subjects ranked preferences for different organic standards. The results suggested that consumers do not have a strong attachment to the current national organic standards.The agreement set up an Organics Working Group, made up of representatives from the USDA, the U.S. Trade Representative, and the European Commission. This group is scheduled to meet once a year with the purpose of exchanging information on organic practices and further harmonizing the regulations between the U.S. and the EU. Specific topics to be discussed include: animal welfare, 5 gallon plastic pots use of veterinary drugs in organic production, GMOs and the avoidance of contamination, and monitoring of conversion practices.

The Working Group is also tasked with reviewing instances of non-compliance with organic standards and with conducting a comprehensive review of the agreement by January 2015. However, since a number of discrepancies between the EU and U.S. organic programs were ignored for the purposes of this agreement, there is a risk of consumer resistance and scandal. For example, if in the future U.S. organic produce marketed with the EU organic logo are revealed to have a GMO content higher than the EU threshold level of 0.09%, this could provoke a political backlash. The Organics Working Group is supposed to help address such potential controversies and to adjust the agreement accordingly, but this is far from an adequate control mechanism to prevent such problems. It seems that both the U.S. and the EU have accepted the risk of potential political problems in the future for the immediate promise of increased organic trade.Production of organic fruits and vegetables is growing in the United States, and many consumers are willing to pay a substantial price premium because they perceive that organic produce has certain desirable qualities. Much of the economic research on the prices of organic versus conventional produce focuses on the demand side of the produce market and analyzes consumer willingness to pay for organic. Little existing research examines the extent to which supply side factors and costs of production influence organic price premiums, nor how farm gate price premiums compare to retail premiums. These premiums derive from a number of factors: there may be a limited supply of organic produce relative to the demand, unit production costs for organic farmers are usually higher than for conventional farmers, and processors and marketers may not benefit from the economies of scale that are available in conventional markets.. Identifying the factors that contribute to organic price premiums and differences in premiums between farm gate and retail prices is an initial step to better understanding the nature of the organic produce market—an important and growing niche in U.S. and California agriculture. This article investigates factors that comprise organic price premiums by comparing costs of production, farm gate prices, and retail prices of organic and conventional strawberries.

Do differences in the cost of production of organic produce explain the observed differences in the prices of organic and conventional produce? Are the price premiums at the farm gate similar to the price premiums observed at the retail level?We examine the prices of fresh organic strawberries in California as an example of whether and how price premiums are transmitted from the producer to the consumer. We calculate correlations of farm gate and retail prices for organic and conventional strawberries in California, controlling for seasonality, and we further calculate the correlation of organic price premiums at the farm gate and retail levels. Price correlations close to one indicate that the farm gate and retail markets move together; correlations far from one, on the other hand, indicate that there may be inefficiencies of arbitrage or high, variable marketing costs incurred between the farm gate and retail levels of sale. We find that the relation between farm gate and retail price premiums is ambiguous, likely because farm gate prices explain little of the variation in retail prices for either organic or conventional strawberries.We analyze the weekly average shipping point price data and retail price data from the Agricultural Marketing Service of the USDA. For many organic fruits and vegetables, the AMS database either does not include organic shipping point prices or the prices are only available for a few weeks each year. Consequently, we focus our analysis on strawberries for which both organic and conventional price data are available for several months of the year. Further, we use shipping point price premiums to represent farm gate prices because they are highly correlated for strawberries. Various factors often make the data difficult to compare across organic and conventional products, limiting the scope and breadth of analysis. Prices for fresh produce vary substantially depending on weather conditions, season, etc. Also, strawberries are often sold in packages of different weights or berry sizes. We can control for only some of these factors in the comparisons that follow. At the farm gate level, strawberries are usually sold in flats consisting of a fixed number of containers, each of a certain weight.

The most data are available for flats of eight 1-lb containers for the Salinas-Watsonville region of California. Figure 1 shows how farm gate price premiums changed between 2007 and 2012 during the summer months. The gaps represent missing data, primarily for the winter months when berries are supplied from Southern California, elsewhere in the United States, or by imports. On average, the farm gate premium for organic strawberries is $0.61 per pound. For average conventional prices of $1.11 per pound between 2007 and 2012, this represents a price premium of about 55%. The price premiums of strawberries vary substantially throughout the year, which is consistent with the findings of previous literature. Jiang and Goodhue find evidence that strawberry promotions play a substantial role in determining the retail price. A seasonal pattern of price premiums is not readily apparent in our data, but seasonal changes in availability of strawberries and other substitutes, along with changes in promotions, likely explain some of the variation in the price premiums that we observe. For retail prices, we use data collected by the Fruit and Vegetable Market News, which surveys more than 200 retailers, consisting of approximately 17,000 individual stores, for their online weekly advertised prices. The majority of the strawberry data are for 1-lb packages. We analyzed prices for the Southwest region of the country for the weeks corresponding to the Salinas-Watsonville price data. The retail price data are the weighted average prices for the stores surveyed for conventional and organic strawberries from 2007 to the present. Figure 2 shows the retail price premiums. The average price for a pound of conventional strawberries was $2.22 and the average price for a pound of organic strawberries was $3.22. This means that the average premium was $1.00 per pound, round pot or 45% over the conventional retail price of strawberries. One explanation for the existence of a price premium is differences in production costs of organic produce versus conventional. Using the calculated cost of production for conventional strawberries in 2010 from the UC Cooperative Extension Cost and Return Studies, we estimate the cost per pound to grow and harvest conventional and organic strawberries. Organic strawberry fields may yield more than 25% fewer strawberries than their conventional counterparts. As a lower bound for the cost difference, we look at the difference in cost of growing 25% fewer strawberries per acre using the same value of inputs. Table 1 shows the estimated cost per pound in 2010 to grow and harvest organic and conventional strawberries, as well as the average farm gate and retail prices in the same year. The price premiums are between 40–45% for both farm gate and retail prices; however, the estimated cost of producing organic strawberries is only 13% higher, using our limited measure. This suggests that production cost differences explain some,but not all, of the price premiums. More complete cost data over several years could clarify this result.The correlations between farm gate and retail prices of organic and conventional strawberries provide evidence that there may be little correlation of price premiums. The weekly retail prices of organic and conventional strawberries are only weakly correlated with their respective farm gate prices. In fact, we cannot reject the null hypothesis that the prices have zero correlation.

This suggests that farm gate prices have little influence in determining the variation in prices that consumers pay for strawberries. Consequently, the farm gate price premium likely has little predictive power to explain the premium consumers pay for organic versus conventional strawberries. The sample size in our analysis is not large enough to assess how strong the relationship between farm gate and retail price premiums is, and a longer time series is needed to compare the price premiums directly. Understanding how retail and farm gate price premiums are related is important for predicting shifts in the supply and demand of organic strawberries. Changes in the price premiums of organic produce are likely to affect the number of farmers and acreage in organic strawberries, imposing a simultaneous relationship between price and supply. Figure 3 indexes the changes in acres of conventional and organic strawberry fields in California, with 2000 as the base year. In 2000 there were 509 acres of organic strawberry fields and 27,600 acres of conventional strawberry fields. By contrast, organic strawberry acreage, although on an overall upward trend, has fluctuated dramatically. This study provides evidence that farm gate and retail prices move separately in the markets for both organic and conventional fresh strawberries. Since the farm gate and retail prices for both organic and conventional strawberries are not highly correlated, the premiums are also weakly correlated.The lack of correlation might be due, in part, to changes in the number of farmers and acres growing organic strawberries or changes in advertising and marketing at the retail level. The finding that retail and farm gate prices of organic and conventional strawberries are not highly correlated suggests that variation in retail marketing has a substantial influence on changes in the retail prices and consequent retail price premiums. Additional research with a longer time series and data on retail price promotions might shed more light on the reasons why retail and farm gate fresh strawberry markets operate distinctly for both conventional and organic berries.Tephritid fruit flies are well-known agricultural pests, and there are approximately 4500 species worldwide . As typical herbivores, host plant expansion is an important survival strategy for tephritid flies, especially when introduced into new areas. Host plant expansion is the ability of an herbivore to use novel host plants without losing their ability to use their original hosts , which facilitates the establishment of tephritids when entering new geographic areas and expanding their damage . Therefore, understanding the mechanism of host plant expansion will be helpful for the control of tephritid pests. Host expansion is well documented in the most destructive species of the genera Anastrepha, Bactrocera, Ceratitis, Dacus, and Rhagoletis among tephritid flies because they have expanded their range worldwide . For example, the ancestral hosts of Zeugodacus cucurbitae  in India are primarily cucurbits, but it began to infest papaya in Hawaii , and it expanded its host range to include mango in Africa . The peach fruit fly Bactrocera zonata  expanded to oranges and tomatoes when introduced from southeastern Asia to Egypt . Because of the typical frugivorous pest, the tephritids spend some stages of life from eggs and larvae to pupae in the fruit of host plants.