Organic Equivalence and Regulatory Disharmony in the U.S. Honey Market

Abstract

We investigate the economic implications of divergence between U.S. Department of Agriculture (USDA) organic certification procedures applied to U.S. producers and the certification procedures applied to products imported from abroad in the context of the U.S. honey market. The USDA does not have a process to recognise domestically produced honey as ‘USDA organic’. Thus, the consumer market for USDA organic-certified honey can only be accessed by foreign producers. To investigate the economic implications of this regulatory disharmony, we employ a choice experiment to assess the price premiums associated with organic certification for foreign honey imports. Our results indicate that disparate organic certification procedures generate a substantial premium for foreign producers—honey labelled as USDA organic receives a $7.13 price premium, relative to unlabelled honey. However, when respondents are aware that all organic-certified honey is imported from abroad, WTP for organic honey decreases by $1.32. These findings highlight a key distinction and potential hidden cost associated with standard ‘equivalence’—that is, mutual recognition that standards in one jurisdiction are ‘substantially similar’ to the standards in another jurisdiction—versus standard ‘harmonization’—that is, making regulations consistent across jurisdictions.