Organic Agriculture Is More Profitable For Farmers, Study Finds

06/03/2015 10:58 am ET | Updated Jun 03, 2015

Organic agriculture alone may or may not be able to feed the world, but a recent study suggests that it can provide a relatively healthy paycheck for its practitioners.

David W. Crowder and John P. Reganold, two researchers at Washington State University, conducted a meta-analysis of studies on agricultural economics to learn whether organic farming is more profitable than conventional farming. And after reviewing 129 studies examining agriculture in 14 countries around the world, they published a paper in Proceedings of the National Academy of Sciences arguing that it is.

Crowder and Reganold found that yields on organic farms were, as their critics often allege, lower than on conventional farms -- as much as 18 percent lower, in fact. And organic farms also have higher labor costs than conventional ones. Yet organic farmers also incur significantly lower costs than their conventional peers for inputs such as fertilizers and pesticides, which makes the overall cost of farming an acre of land nearly equal in the two systems.

For those reasons, they found that the breakeven cost for organic farming is between 5 and 7 percent higher than for conventional farming. That sounds bad.

But their meta-analysis also revealed that consumers are willing to pay a premium of about 30 percent for organic foods. Because that premium far exceeds the differential between the break-even points for the two methods, organic farms end up being significantly more profitable than conventional ones.

A crank might respond that the premium for organic products will go down as organic farms become more numerous. According to Crowder and Reganold, just one percent of the world's cropland is currently farmed organically. It's conceivable that if organic acreage were to, say, double, increased supply would push the price down closer to the break-even point.

Yet the researchers note that their study does not explicitly account for the long-term ecological benefits of using organic methods. Countless studies have shown that organic farms are better than conventional farms at reducing erosion, promoting natural pest control, supporting pollinator populations and preventing harmful runoff of agricultural chemicals, all of which have very real economic value for individual farms and society at large. If these externalities were accounted for, they argue, the organic side of the ledger would get a major boost.

Even without taking stock of these other factors, though, it's clear that there's money to be made in organic agriculture. No wonder organic farm acreage is booming in America.

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