Study compares profitability of organic and conventional agriculture
To be sustainable, organic agriculture must be profitable. How lucrative is organic farming relative to conventional methods? The answer may surprise you.
Soil sciences professor John Reganold teamed with WSU entomologist David Crowder to compare the financial performance of organic and conventional farming. The pair synthesized data across studies spanning a 40-year period. They compared costs, gross returns, cost/benefit ratios, and net present values—a measure that accounts for inflation.
Their study heralds organic farming as the clear profitability frontrunner. The authors consulted with 3 agricultural economists to confirm their findings, which were published in the Proceedings of the National Academy of Sciences.
While organic farms have lower crop yields, their crops command prices that are roughly a third higher than those of conventional crops. Those price premiums have held steady for 4 decades. Higher prices translate into sizable profit margins.
Organic farming currently accounts for only 1 percent of agriculture worldwide. While price premiums give farmers a strong incentive to go organic, converting a conventional farm is financially risky. A chemical-free transitional period, often 3 years, is required before foods can wear the “certified organic” label. During this time, crop yields drop, but farmers can’t raise prices to make up the difference.
Government policies must shift to help would-be organic farmers over the hump, the authors say. If that happens, organic agriculture could expand to feed a larger share of the world sustainably.