Organic agriculture: sustainable and profitable

Tuesday, 23 June, 2015

Organic production practices enhance the sustainability of farming, but organic cropland currently constitutes only 1% of agricultural land.

Is the trend to stick with conventional agriculture an economic one? If so, the global expansion of organic cropland may well depend on whether or not it can be economically competitive with conventional farming.

A study of the financial performance of 55 crops on five continents (including Australia and New Zealand) over 40 years has found that organically grown products can be financially competitive with conventionally grown products.

David W Crowder and John P Reganold analysed crops that were grown using both organic and conventional practices. The authors found that when price premiums were not applied to organically grown crops, the benefit/cost ratios were significantly less than those for conventionally grown crops, and the net present values of organic agriculture — measures of profitability — were up to 27% less than those for conventional agriculture.

Applying cost premiums, however, made organic agriculture up to 35% more profitable than conventional agriculture, and while premiums ranged between 29% and 32%, breakeven premiums were between 5 and 7%. Yields were up to 18% lower and labour costs were up to 13% higher for organic farming, compared with conventional farming.

The authors say the results suggest that organic practices may continue to expand even with declines in organic price premiums and can contribute a growing share in feeding the world.

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