Organic farming more profitable for farmers – WSU Insider


By Sylvia Kantor, College of Agricultural, Human and Natural Resource Sciences

PULLMAN, Wash. — Extensive study finds organic farming is more profitable for farmers than conventional farming.

Despite lower yields, the global study shows that the profit margins of organic farming were significantly higher than those of conventional farming. The results show that there is room for organic agriculture to grow and, with its environmental benefits, contribute more to sustainably feeding the world. Organic farming currently accounts for only one percent of global agriculture.

Reganold,-Left,-and-Crowder
Reganold, left, and Crowder.

The study, published this week in the Proceedings of the National Academy of Sciences, was authored by Washington State University scientists David Crowder and John Reganold.

To be sustainable, organic farming must be profitable. This motivated Crowder and Reganold to analyze dozens of studies comparing the financial performance of organic and conventional agriculture.

“The reason we wanted to look at economics,” said Crowder, an entomologist who studies biological systems, “is that more than anything, that’s what really drives the expansion and contraction of organic agriculture. – whether or not farmers can make money It was a bit surprising that no one looked at this in a broad sense.

Organic price premiums incentivize farmers to adopt more sustainable farming practices. The authors suggest that government policies could further stimulate the adoption of organic farming practices and ease the transition for conventional farmers.

Room to grow

Actual premiums paid to organic farmers ranged from 29 to 32% above conventional prices. Even with organic crop yields up to 18 percent lower than conventional crops, the break-even point for organic farming was 5 to 7 percent.

“It was a big surprise to me,” said Reganold, a soil scientist and organic farming specialist. “This means that organic farming has room to grow; there is room for premiums to decrease over time. But what we found was that the premiums remained fairly stable over the 40 years represented in the study.

Of 129 original studies, 44 met Crowder and Reganold’s criteria for inclusion in the meta-analysis of costs, gross returns, benefit-cost ratios, and net present values ​​- a measure that takes inflation into account. The analysis covered 55 cultures in 14 countries on five continents. The published article provides the criteria used to select the studies as well as a list of studies that were rejected.

“This is the first large-scale synthesis of the economic sustainability of organic versus conventional agriculture that we know of,” Crowder said. The authors consulted three agricultural economists to confirm their findings.

Admittedly, past performance is not an indicator of future results – particularly if there is a major shift to organic production, which could lead to lower prices due to increased supply. The study did not attempt to predict future scenarios.

Unique to the analysis was the inclusion of yield and economic data for crops grown under a rotation system, in addition to data for single crops. The study included data on the benefits of multiple crops grown over multiple seasons, a more accurate reflection of how farmers profit from farming.

None of the comparative studies took into account the environmental costs and benefits of agriculture. Environmental costs tend to be lower and benefits higher in organic farming. But for consumers who believe organic farming is more environmentally friendly, organic premiums can replace the monetary value of these costs and benefits.

Incentive to change

Organic premiums provide a strong incentive for farmers to switch from conventional to organic farming.

“Most of the growers we work with, and probably in the US in particular, do a little organic and a lot of conventional,” Crowder said. “If they make some money on that organic acreage, they could convert more of their farm.”

But farmers who convert to organic are in a vulnerable position. The transition period for organic certification puts farmers at financial risk when their yields drop but they do not yet receive premiums.

“The challenge facing policy makers,” the authors write, “is to develop government policies that support conventional farmers converting to organic and other sustainable systems, particularly during the transition period, often the first three years.

As long as environmental degradation, population growth and climate change remain challenges, agricultural practices that are profitable for farmers while providing additional sustainability benefits are needed, they said.

Quote: Crowder, D. and J. Reganold. 2015. Financial Competitiveness of Organic Agriculture Globally. Proceedings of the National Academy of Sciences. 2015 June 1, doi: 10.1073/pnas.1423674112.

contacts:
David Crowder, WSU Department of Entomology, 509-335-7965, [email protected]
John Reganold, WSU Department of Crop and Soil Sciences, 509-335-8856, [email protected]

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