Are the significantly higher prices for organic groceries justifiable? What makes them cost more (sometimes much more) than regular groceries? Some people can’t afford the difference.
Asked by Joan O’Henley, Oakland, Calif.
The benefits of organic food, to you and to the planet, usually outweigh the cost. But let’s take a closer look at why organics are more expensive than conventionally grown foods. It turns out that the expense of growing organics is only half of the story. The production cost of conventionally grown foods is artificially depressed as well.
“Organic” is a label regulated by the U.S. Department of Agriculture (USDA) through the National Organic Program (NOP). The National Organic Standards were adopted in 2002 and list the criteria for a product to be certified organic. Without a USDA certification, marketing products as organic can result in heavy fines. There are also levels of certification, from 100% certified organic to individual ingredients that are organic but compose less than 70% of the total ingredients. Buzz words like “natural,” “cage free,” “hormone free” and “fair trade” are not synonymous with “organic.” Organic operations may include these practices, or they may not. The term organic may also be applied to dairy, eggs and meat. For the purposes of this answer, I will concentrate on organic produce.
The essential answer touched upon five areas of production costs. Let’s break these down in a little more detail to understand why organic operations are more expensive.
Seed acquisition. In just the last decade or two, the seeds for many cash crops in the US have become genetically modified (GM). In the United States, corn, soybean and cotton, closely followed by canola, sugar beets and papaya, are available almost exclusively as GM strains. The seeds are typically modified to be resistant to pests or herbicides, to increase yield per plant or tolerate denser growing conditions. For most fruits and vegetables, seeds come from conventionally grown, but not GM, plants. Organic standards require, however, that produce be grown from organic seeds, which means they are not genetically modified and have come from organically grown plants (the only exception is if organic seeds are not commercially available, in which case conventional, non-GM seeds are allowed.) Because the demand for organic seeds is usually higher than the supply, they are often more expensive than their conventional or GM counterparts.
Pesticide and fertilizer purchase. Conventional producers spend a lot of money on pesticides and herbicides to control insects, weeds, fungi, bacteria and viruses. They also purchase huge amounts of synthetic fertilizers to replenish soil depleted in the key nutrients nitrogen, potassium and phosphate. Organic operations are banned from using most synthetic compounds, including pesticides and fertilizers. Instead, organic operations use mechanical methods of controlling pests (see “labor” below), and maintain on-site compost piles for fertilizing crops. Due to safety concerns of using animal manure on produce slated for human production, there are strict regulations on compost piles for internal temperature. The compost is applied to certified fields and serves both as an input of nutrients and to increase aeration and water retention. In this case, organic are cheaper than conventional methods. In terms of pest control however, there is an increase in labor time that may offset this savings (see below).
Equipment rental/purchase. Equipment like tractors and harvesters are necessary for any farming operation beyond subsistence farming. If we take the example of organic strawberry farming in central California, the cost of equipment purchase and maintenance is about 11% of a farm's profit. There are many subsidies available to farmers to offset the costs of buying or renting this equipment. The Agricultural Appropriations bill offered $4.6 billion in loans and $460 million in subsidies to farmers in 2011. But most of this money goes to large-scale operations. Currently, most large-scale operations grow food conventionally. Smaller farms, including most organic producers, have to pay full price. This allows non-organic farms to sell their products for cheaper and still turn a profit. This dichotomy may not last, however, as organic operations expand and some large-scale conventional farms turn to organic methods.
Labor. One major disadvantage of organic methods of growing produce is the increase in labor time invested by individuals. There is more planning time involved in crop rotation, since farmers must plan a pattern of rotation that includes legumes or other nitrogen-fixing crops. This indirectly leads to fewer years in which crops with a high market value can be grown in a given field. There is also a greater need for manual pest control. This could include such time-intensive activities as hand weeding, setting mechanical traps for pests, and creating buffer zones. Time is money. Organic farms pay more in wages based solely on the number of person-hours invested.
Many conventional produce companies, especially those with farms in Central and South American countries, pay astoundingly little for the produce. Bananas are a prominent example of this. The fair trade movement is trying to remedy this situation, and many organic operations are committed to the ideals of paying enough to sustain farmers, no matter how low the market price might be. Even if it’s the right thing to do, it’s another price disadvantage for organic, fair-trade food.
Transportation and advertising. Again, size counts. Large farms get bulk discounts or own their own transportation systems, enabling them pay less per piece to get produce to market. They may also produce many kinds of produce, leading to better placement in markets, and higher brand recognition without the cost of advertising. Most organic farms are small and do not enjoy these benefits. Additionally, stringent controls within organic regulations prevent the transport of organic and non-organic produce together. To top it all off, the store may add a premium to the price of organics just because some consumers will accept the larger markup.
Besides these five, shared costs, organics also undergo a certification process that can cost quite a bit of money. New certifications usually cost less than $1,000, with a similar annual fee, but this depends on the agency with which you certify. There is also a sales appropriation based on how much profit you made the year before. For our organic strawberry farmer, it amounts to $150 per acre. As part of the certification process, fields must be worked organically for three years before certification is issued. During this time, farmers see a decrease in yield compared to conventional methods, but cannot yet market their product as organic and thus see a significant loss in profit. These, and other risky business practices, like renting land, motivate farmers to keep prices for organic food high.
All of these costs of production couple with growing consumer awareness. The simple laws of supply and demand state that if the demand is greater than the supply, the price goes up. Both the supply and demand for organic produce have increased substantially over recent decades, but demand is increasing faster.
A better understanding of the contributors to the high cost of organic produce may do little to soothe the sting of the price tag. Still, some are clearly justified, while others are artifacts of regulation, or lack thereof. They could be changed, especially if organic consumers target the specific causes to bring the price of organics down.
Acata Felton, '12, is a biology major.
