Hot Spots and Spatial Autocorrelation in Certified Organic Operations in the United States

Due to a wide variety of natural and economic factors, agriculture is a highly spatial industry. Existing analyses often reveal the presence of both spatial autocorrelation, which reflects the concept that agricultural processes are correlated over distance or across geographic boundaries, and hot spots, which are clustered areas with positively correlated high-attribute values (discussed further later). Roe, Irwin, and Sharp (2002) found that spatial lags were present in data relating to the hog production industry. Schmit and Hall (2013) addressed the presence and impact of food industry clusters while Stewart et al. (2009) analyzed clusters specifically in Tennessee's agriculture industry. Grogan and Goodhue (2012) used spatial analysis and found evidence that citrus producers chose pest control methods similar to those of nearby producers. Identification of hot spots or industry clusters is important because research often shows that they can be advantageous for economic development (Morrison Paul and Seigel 1999, Feser 1998, Chevassus-Lozza and Galliano 2003, Cainelli 2008, Glaeser et al. 1992, Greenstone, Hornbeck, and Moretti 2010, Barkley and Henry 1997, Duranton and Puga 2004, Gibbs and Bernat 1997, Gabe 2004, 2008, Graham and Kim 2008, Rocha and Sternberg 2005, Feser, Renski, and Goldstein 2008).No theoretical reason has been found to suggest that hot spots and spatial correlation in organic agriculture, which we define as including organic production and handling, should be similar to agriculture in general. As a special case of agriculture, organic operations display different characteristics from those of conventional agricultural operations, including more restricted production methods (National Organic Program 2015), higher input costs (Economic Research Service 2012), need for more specialized labor (Klonsky and Tourte 1998), and more-frequent use of their own resources (Argiles and Brown 2010, Schmidtner et al. 2012). The demand side of the organic food market is different as well. Consumers of organic tend to have stronger concerns about healthiness, the environment, food safety, animal welfare, and local economies (Hughner et al. 2007). These factors imply that the needs of organic operations are different and that such operations will not necessarily gravitate only to areas where agricultural establishments are prevalent.The organic food industry is growing at a much faster rate than the conventional food industry; retail sales of organic food increased from $11 billion in 2004 to $27 billion in 2012 (Osteen, Gottlieb, and Vasavada 2012, Onken, Bernard, and Pesek 2011), and the amount of land devoted to organic food crops doubled between 1997 and 2005 (Dimitri and Oberholtzer 2009). These trends have led to concern that some sectors of the organic food industry (particularly corn and soybeans, which are important inputs in production of organic milk and dairy products) may not be growing at a sufficiently fast pace to keep up with the increasing demand (Dimitri and Oberholtzer 2009).Because of the differences between organic and conventional agriculture and the growth of specific sectors of the organic industry, it is important to analyze and better understand where organic operations are thriving and where they are not. More specifically, understanding spatial relationships in the concentration of organic operations and how organic and nonorganic spatial relationships potentially differ may prove important as policymakers and industry participants plan for continued growth. This type of spatial analysis and identification of organic hot spots or cold spots is also an important first step in further research on the organic sector. Once the hot and cold spots are identified, that information can be used to answer follow-up questions relating to their formation and the economic impact of organic hot spots. This type of spatial analysis can therefore be valuable to governmental and private organizations that focus on development of the organic sector and on regional economic development. …