Economics Organic farming

1 economics

1.1 geographic producer distribution
1.2 growth
1.3 productivity

1.3.1 long term studies


1.4 profitability
1.5 energy efficiency
1.6 sales , marketing
1.7 distributors

1.7.1 direct-to-consumer sales


1.8 labor , employment
1.9 world s food security
1.10 capacity building in developing countries

1.10.1 millennium development goals

economics

the economics of organic farming, subfield of agricultural economics, encompasses entire process , effects of organic farming in terms of human society, including social costs, opportunity costs, unintended consequences, information asymmetries, , economies of scale. although scope of economics broad, agricultural economics tends focus on maximizing yields , efficiency @ farm level. economics takes anthropocentric approach value of natural world: biodiversity, example, considered beneficial extent valued people , increases profits. entities such european union subsidize organic farming, in large part because these countries want account externalities of reduced water use, reduced water contamination, reduced soil erosion, reduced carbon emissions, increased biodiversity, , assorted other benefits result organic farming.

traditional organic farming labor , knowledge-intensive whereas conventional farming capital-intensive, requiring more energy , manufactured inputs.

organic farmers in california have cited marketing greatest obstacle.

geographic producer distribution

the markets organic products strongest in north america , europe, of 2001 estimated have $6 , $8 billion respectively of $20 billion global market. of 2007 australasia has 39% of total organic farmland, including australia s 1,180,000 hectares (2,900,000 acres) 97 percent of land sprawling rangeland (2007:35). sales 20x much. europe farms 23 percent of global organic farmland (6,900,000 ha (17,000,000 acres)), followed latin america 19 percent (5.8 million hectares - 14.3 million acres). asia has 9.5 percent while north america has 7.2 percent. africa has 3 percent.

besides australia, countries organic farmland argentina (3.1 million hectares - 7.7 million acres), china (2.3 million hectares - 5.7 million acres), , united states (1.6 million hectares - 4 million acres). of argentina s organic farmland pasture, of australia (2007:42). spain, germany, brazil (the world s largest agricultural exporter), uruguay, , uk follow united states in amount of organic land (2007:26).

in european union (eu25) 3.9% of total utilized agricultural area used organic production in 2005. countries highest proportion of organic land austria (11%) , italy (8.4%), followed czech republic , greece (both 7.2%). lowest figures shown malta (0.1%), poland (0.6%) , ireland (0.8%). in 2009, proportion of organic land in eu grew 4.7%. countries highest share of agricultural land liechtenstein (26.9%), austria (18.5%) , sweden (12.6%). 16% of farmers in austria produced organically in 2010. same year proportion of organic land increased 20%.: in 2005 168,000 ha (415,000 ac) of land in poland under organic management. in 2012, 288,261 hectares (712,308 acres) under organic production, , there 15,500 organic farmers; retail sales of organic products eur 80 million in 2011. of 2012 organic exports part of government s economic development strategy.

after collapse of soviet union in 1991, agricultural inputs had been purchased eastern bloc countries no longer available in cuba, , many cuban farms converted organic methods out of necessity. consequently, organic agriculture mainstream practice in cuba, while remains alternative practice in other countries. cuba s organic strategy includes development of genetically modified crops; corn resistant palomilla moth

growth

organic farmland world region (2000-2008)

in 2001, global market value of certified organic products estimated @ usd $20 billion. 2002, usd $23 billion , 2015 more usd $43 billion. 2014, retail sales of organic products reached usd $80 billion worldwide. north america , europe accounted more 90% of organic product sales.

organic agricultural land increased fourfold in 15 years, 11 million hectares in 1999 43.7 million hectares in 2014. between 2013 , 2014, organic agricultural land grew 500,000 hectares worldwide, increasing in every region except latin america. during time period, europe’s organic farmland increased 260,000 hectares 11.6 million total (+2.3%), asia’s increased 159,000 hectares 3.6 million total (+4.7%), africa’s increased 54,000 hectares 1.3 million total (+4.5%), , north america’s increased 35,000 hectares 3.1 million total (+1.1%). of 2014, country organic land australia (17.2 million hectares), followed argentina (3.1 million hectares), , united states (2.2 million hectares).

in 2013, number of organic producers grew 270,000, or more 13%. 2014, there reported 2.3 million organic producers in world. of total global increase took place in philippines, peru, china, , thailand. overall, majority of organic producers in india (650,000 in 2013), uganda (190,552 in 2014), mexico (169,703 in 2013) , philippines (165,974 in 2014).

productivity

studies comparing yields have had mixed results. these differences among findings can attributed variations between study designs including differences in crops studied , methodology results gathered.

a 2012 meta-analysis found productivity typically lower organic farming conventional farming, size of difference depends on context , in cases may small. while organic yields can lower conventional yields, meta-analysis published in sustainable agriculture research in 2015, concluded organic on-farm practices narrow gap. timely weed management , application of manure in conjunction legume forages/cover crops shown have positive results in increasing organic corn , soybean productivity. more experienced organic farmers found have higher yields other organic farmers starting out.

another meta-analysis published in journal agricultural systems in 2011 analyzed 362 datasets , found organic yields on average 80% of conventional yields. author s found there relative differences in yield gap based on crop type crops soybeans , rice scoring higher 80% average , crops wheat , potato scoring lower. across global regions, asia , central europe found have relatively higher yields , northern europe relatively lower average.

a 2007 study compiling research 293 different comparisons single study assess overall efficiency of 2 agricultural systems has concluded organic methods produce enough food on global per capita basis sustain current human population, , potentially larger population, without increasing agricultural land base. researchers found while in developed countries, organic systems on average produce 92% of yield produced conventional agriculture, organic systems produce 80% more conventional farms in developing countries, because materials needed organic farming more accessible synthetic farming materials farmers in poor countries. study s methodology , results contested d.j. connor of university of melbourne, in short communication published in field crops research. connor writes errors in badgley et al. result in major overestimation of productivity of oa .

long term studies

a study published in 2005 compared conventional cropping, organic animal-based cropping, , organic legume-based cropping on test farm @ rodale institute on 22 years. study found crop yields corn , soybeans similar in organic animal, organic legume, , conventional farming systems . found less fossil energy expended produce corn in rodale institute’s organic animal , organic legume systems in conventional production system. there little difference in energy input between different treatments producing soybeans. in organic systems, synthetic fertilizers , pesticides not used . of 2013 rodale study ongoing , thirty-year anniversary report published rodale in 2012.

a long-term field study comparing organic/conventional agriculture carried out on 21 years in switzerland concluded crop yields of organic systems averaged on 21 experimental years @ 80% of conventional ones. fertilizer input, however, 34 – 51% lower, indicating efficient production. organic farming systems used 20 – 56% less energy produce crop unit , per land area difference 36 – 53%. in spite of considerably lower pesticide input quality of organic products hardly discernible conventional analytically , came off better in food preference trials , picture creating methods

profitability

in united states, organic farming has been shown 2.9 3.8 times more profitable farmer conventional farming when prevailing price premiums taken account. globally, organic farming between 22 , 35 percent more profitable farmers conventional methods, according 2015 meta-analysis of studies conducted across 5 continents.

the profitability of organic agriculture can attributed number of factors. first, organic farmers not rely on synthetic fertilizer , pesticide inputs, can costly. in addition, organic foods enjoy price premium on conventionally produced foods, meaning organic farmers can more yield.

the price premium organic food important factor in economic viability of organic farming. in 2013 there 100% price premium on organic vegetables , 57% price premium organic fruits. these percentages based on wholesale fruit , vegetable prices, available through united states department of agriculture’s economic research service. price premiums exist not organic versus nonorganic crops, may vary depending on venue product sold: farmers markets, grocery stores, or wholesale restaurants. many producers, direct sales @ farmers markets profitable because farmer receives entire markup, time , labor-intensive approach.

there have been signs of organic price premiums narrowing in recent years, lowers economic incentive farmers convert or maintain organic production methods. data 22 years of experiments @ rodale institute found that, based on current yields , production costs associated organic farming in united states, price premium of 10% required achieve parity conventional farming. separate study found on global scale, price premiums of 5-7% percent needed break conventional methods. without price premium, profitability farmers mixed.

for markets , supermarkets organic food profitable well, , sold @ higher prices non-organic food.

energy efficiency

in recent assessments of energy efficiency of organic versus conventional agriculture, results have been mixed regarding form more carbon efficient. organic farm systems have more not been found more energy efficient, however, not case. more anything, results tend depend upon crop type , farm size.

a comprehensive comparison of energy efficiency in grain production, produce yield, , animal husbandry concluded organic farming had higher yield per unit of energy on vast majority of crops , livestock systems. example, 2 studies - both comparing organically- versus conventionally-farmed apples - declare contradicting results, 1 saying organic farming more energy efficient, other saying conventionally more efficient.

it has been found labor input per unit of yield higher organic systems compared conventional production.

sales , marketing

most sales concentrated in developed nations. in 2008, 69% of americans claimed buy organic products, down 73% in 2005. 1 theory change consumers substituting local produce organic produce.

distributors

the usda requires distributors, manufacturers, , processors of organic products certified accredited state or private agency. in 2007, there 3,225 certified organic handlers, 2,790 in 2004.

organic handlers small firms; 48% reported sales below $1 million annually, , 22% between $1 , $5 million per year. smaller handlers more sell independent natural grocery stores , natural product chains whereas large distributors more market natural product chains , conventional supermarkets, small group marketing independent natural product stores. handlers work conventional farmers convert land organic knowledge farmer have secure sales outlet. lowers risk handler farmer. in 2004, 31% of handlers provided technical support on organic standards or production suppliers , 34% encouraged suppliers transition organic. smaller farms join in cooperatives market goods more effectively.

93% of organic sales through conventional , natural food supermarkets , chains, while remaining 7% of u.s. organic food sales occur through farmers markets, foodservices, , other marketing channels.

direct-to-consumer sales

in 2012 census, direct-to-consumer sales equaled $1.3 billion, $812 million in 2002, increase of 60 percent. number of farms utilize direct-to-consumer sales 144,530 in 2012 in comparison 116,733 in 2002. direct-to-consumer sales include farmers markets, community supported agriculture (csa), on-farm stores, , roadside farm stands. organic farms sell products direct retailer, direct restaurant , direct institution. according 2008 organic production survey, approximately 7% of organic farm sales direct-to-consumers, 10% went direct retailers, , approximately 83% went wholesale markets. in comparison, 0.4% of value of convention agricultural commodities direct-to-consumers.

while not products sold @ farmer’s markets certified organic, direct-to-consumer avenue has become increasingly popular in local food distribution , has grown substantially since 1994. in 2014, there 8,284 farmer’s markets in comparison 3,706 in 2004 , 1,755 in 1994, of found in populated areas such northeast, midwest, , west coast.

labor , employment

organic production more labor-intensive conventional production. on 1 hand, increased labor cost 1 factor makes organic food more expensive. on other hand, increased need labor may seen employment dividend of organic farming, providing more jobs per unit area conventional systems. 2011 unep green economy report suggests [a]n increase in investment in green agriculture projected lead growth in employment of 60 per cent compared current levels , green agriculture investments create 47 million additional jobs compared bau2 on next 40 years. unep argues [b]y greening agriculture , food distribution, more calories per person per day, more jobs , business opportunities in rural areas, , market-access opportunities, developing countries, available.

world s food security

in 2007 united nations food , agriculture organization (fao) said organic agriculture leads higher prices , hence better income farmers, should promoted. however, fao stressed organic farming 1 not feed current mankind, less bigger future population. both data , models showed organic farming far sufficient. therefore, chemical fertilizers needed avoid hunger. other analysis many agribusiness executives, agricultural , ecological scientists, , international agriculture experts revealed opinion organic farming not increase world s food supply, might way eradicate hunger.

fao stressed fertilizers , other chemical inputs can increase production, particularly in africa fertilizers used 90% less in asia. example, in malawi yield has been boosted using seeds , fertilizers. fao calls using biotechnology, can smallholder farmers improve income , food security.

also nepad, development organization of african governments, announced feeding africans , preventing malnutrition requires fertilizers , enhanced seeds.

according more recent study in sciencedigest, organic best management practices shows average yield 13% less conventional. in world s poorer nations of world s hungry live, , conventional agriculture s expensive inputs not affordable majority of farmers, adopting organic management increases yields 93% on average, , important part of increased food security.

capacity building in developing countries

organic agriculture can contribute ecological sustainability, in poorer countries. application of organic principles enables employment of local resources (e.g., local seed varieties, manure, etc.) , therefore cost-effectiveness. local , international markets organic products show tremendous growth prospects , offer creative producers , exporters excellent opportunities improve income , living conditions.

organic agriculture knowledge intensive. globally, capacity building efforts underway, including localized training material, limited effect. of 2007, international federation of organic agriculture movements hosted more 170 free manuals , 75 training opportunities online.

in 2008 united nations environmental programme (unep) , united nations conference on trade , development (unctad) stated organic agriculture can more conducive food security in africa conventional production systems, , more sustainable in long-term , yields had more doubled organic, or near-organic practices had been used , soil fertility , drought resistance improved.

millennium development goals

the value of organic agriculture (oa) in achievement of millennium development goals (mdg), particularly in poverty reduction efforts in face of climate change, shown contribution both income , non-income aspects of mdgs. these benefits expected continue in post-mdg era. series of case studies conducted in selected areas in asian countries asian development bank institute (adbi) , published book compilation adb in manila document these contributions both income , non-income aspects of mdgs. these include poverty alleviation way of higher incomes, improved farmers health owing less chemical exposure, integration of sustainable principles rural development policies, improvement of access safe water , sanitation, , expansion of global partnership development small farmers integrated in value chains.

a related adbi study sheds on costs of oa programs , set them in context of costs of attaining mdgs. results show considerable variation across case studies, suggesting there no clear structure costs of adopting oa. costs depend on efficiency of oa adoption programs. lowest cost programs more ten times less expensive highest cost ones. however, further analysis of gains resulting oa adoption reveals costs per person taken out of poverty lower estimates of world bank, based on income growth in general or based on detailed costs of meeting of more quantifiable mdgs (e.g., education, health, , environment).