Organic Crops Competitive with Conventional Systems
August 9, 1999
Farm profits from organic cropping systems can equal or exceed profits
from conventional rotations in the Midwestern United States, according
to a new study by the Henry A. Wallace Institute for Alternative
Agriculture. The report, The Economics of Organic Grain and Soybean
Production in the Midwestern United States, reviews past and current
research on conditions that make growing organic crops profitable, as
well as studies that compare organic grain and soybean production with
conventional production.
There has been dramatic growth in the U.S. and worldwide in the
production of and demand for organically produced food and fiber. At
the same time, consumers around the world have been willing to pay
premium prices for organic products. For example, farm prices for
organic corn were on average 35% higher than U.S. cash prices for
conventionally grown corn in 1995, 44% higher in 1996 and 73%
higher in 1997. Prices for organic, cleaned Clear Hilum soybeans (the
type used by the Japanese for tofu) were more than twice the U.S. cash
price for conventionally grown soybeans in 1995 and 1997, and almost
twice those levels in 1996. Nonetheless, the study found that premiums
are not always necessary for organic systems to outperform
conventional systems.
To illustrate the potential profitability of organic agriculture, Rick
Welsh of the Wallace Institute analyzed a diverse set of academic
studies comparing organic and conventional grain cropping systems.
Among the data reviewed were six land-grant university studies that
compared organic and conventional grain cropping systems; studies
were conducted in Iowa, Kansas, Minnesota, Nebraska and two in
South Dakota.
Following a comprehensive review of the "best science" available on
the subject, Dr. Welsh determined that when organic systems were
more profitable than conventional rotations, it was usually due to one
or more of the following factors:
* lower production costs;
* higher net returns for crops grown in the organic rotations; and
* drought hardiness, allowing higher performance in drier areas or
during drier periods.
In addition to these economic benefits, the report found that organic
systems in the U.S. Midwest produce benefits for the natural
environment and workers' health.
The report's recommendations call for a greater U.S. public policy
commitment to organic agriculture, especially in areas related to
research, investment and education. Several European countries have
already instituted policies that support organic farming. Denmark, for
example, has enacted financial support policies, including information
and marketing support and financial assistance during the transition to
organic farming. Other countries with similar policies include Sweden,
Germany, Norway, Finland, Austria and Switzerland. Efforts have paid
off: the organic farming sector in these countries has increased
dramatically since the programs were initiated.
There has been some support for organic agriculture in the United
States. In Iowa, for example, a state-level program supports organic
farming through the Environmental Quality Incentive Program (EQIP)
that provides targeted financial incentives to farmers. Administered by
the U.S. Department of Agriculture, EQIP is designed to promote
adoption of particular conservation management practices. EQIP is a
federal-state cost-share program in which states designate a list of
conservation management practices. If EQIP funding is increased and
other state legislatures list certified organic production as a
conservation practice, EQIP could play a significant role in increasing
the number of acres farmed organically in the U.S.
Copies of The Economics of Organic Grain and Soybean Production in
the Midwestern United States are available for US$15 from the
Wallace Institute. The report is also available online at the Institute's
web site, http://www.hawiaa.org.
Source: Henry A. Wallace Institute press release, June 4, 1999. The
Economics of Organic Grain and Soybean Production in the
Midwestern United States, Policy Studies Report No. 13, May 1999.
Contact: The Henry A. Wallace Institute for Alternative Agriculture,
9200 Edmonston Road, #117, Greenbelt, MD 20770; phone (301) 441-
8777; fax (301) 220-0164; email hawiaa@access.digex.net; web site
www.hawiaa.org.
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