Why Organic Foods Cost so Much More than Conventional


Why do organic foods cost so much more than conventionally grown foods?

Nutrition:

In 2010, the American Journal of Clinical Nutrition published a review by Dangour et al of the best available evidence evaluating research on the nutritional quality of organic foods. The researchers searched more than 50,000 articles to locate 162 studies comparing organic and conventional crops and livestock. They found that overall, conventional crops were higher in nitrogen (due to nitrogen fertilizers) and organic crops were higher in phosphorous (due to phosphorus fertilizers) and what they called “titratable acidity” which is due to ripeness at harvesting. But there were no differences in other vitamins or minerals analysed, including vitamin C, phenolic compounds, magnesium, potassium, calcium, zinc and copper. The conclusion was that organic and conventional crops were comparable in nutritional value.

Taste:

A study published in 2007 by Zhao et al in the Journal of Food Science took the same varieties of lettuce, spinach, rocket, mustard greens, tomatoes, cucumber and onions. They grew two crops alongside each other in separate plots: one was grown organically and the other using conventional agricultural Organic Food Charttechniques. They then asked consumers to evaluate the taste and how much they like the two types. No differences could be detected, except for a preference for the conventional tomatoes that were slightly riper.

Pesticides and Bacteria:

According to a study in the Annals of Internal Medicine (2012) by Smith-Spangler et al, although all the foods tested fell within regulation limits, organic foods are 30% less likely to be contaminated by pesticides than conventional foods. “We didn’t find strong evidence that organic food was significantly more nutritious or healthier,” Smith-Spangler said, “and similar levels of both types are contaminated with bacteria.”

Despite there being no evidence to support the claim that organic food is more nutritious, tastes better, or has less bacteria, consumers are still willing to pay more for it than conventional food. We will, however, not go into why consumer demand is the way it is, for it matters little why consumers believe the things they believe; it matters that they believe it and that it affects their cost-benefit analysis in buying. For our purposes, we will focus on economic principles of why organic food costs more.

Some might believe that organic food should cost less than conventional food because production is spared the costs of chemicals, synthetic pesticides, genetically engineered seeds, and antibiotics, but in reality, organic food usually costs between 20-100% more than conventional foods. Why?

According to the Food and Agriculture Organization of the United Nations (FAO) and Fox News.com, these are some of the reasons.

1) Less chemicals means more labor and higher costs:

Conventional farmers use all of those chemicals and synthetic pesticides because they end up reducing the cost of production by getting the job done faster and more efficiently. Without them, organic farmers have to hire more workers for tasks like hand-weeding, cleanup of polluted water, and the remediation of pesticide contamination.

The Organic Farming Research Foundation explained it well: “The organic price tag more closely reflects the true cost of growing the food: substituting labor and intensive management for chemicals, the health and environmental costs of which are borne by society.”

a) Higher cost of fertilizer for organic crops:

Sewage sludge and chemical fertilizers might not be something you want in your food, but conventional farmers use them because they don’t cost much and are cheap to transport. Organic farmers eschew these inexpensive solutions in order to keep their crops natural and instead use compost and animal manure, which is more expensive to make/collect and ship.

b) Crop rotation:

Instead of using chemical weed-killers, organic farmers conduct sophisticated crop rotations to keep their soil healthy and prevent weed growth. After harvesting a crop, an organic farmer may use that area to grow “cover crops,” which add nitrogen to the soil to benefit succeeding crops.
Conventional farmers, on the other hand, can use every acre to grow the most profitable crops. Because crop rotation reduces the frequency in which organic farmers can grow profitable crops, they’re unable to produce the larger quantities that are most cost-effective for conventional farmers.

c) Costs of covering higher loss:

Conventional farmers use certain chemicals to reduce their loss of crops. For example, synthetic pesticides repel insects and antibiotics maintain the health of the livestock. Since organic farmers don’t use these, their losses are higher, which costs the farmer more and increases the cost to the consumer. Additionally, without all the chemical preservatives added to conventional foods, organic foods face a shorter storage time and shelf life.

d) Organic food grows more slowly:

Time is money. Not only are organic farms typically smaller than conventional ones, but they also, on average, take more time to produce crops because they refrain from using the chemicals and growth hormones used by conventional farmers.

2) Demand overwhelms supply:

Retail sales of organic food rose from $3.6 billion in 1997 to $21.1 billion in 2008, according to the USDA, and 58 percent of Americans claim they prefer to eat organic over non-organic food. However, organic farmland only accounts for 0.9 percent of total worldwide farmland, and organic farms tend to produce less than conventional farms. Conventional farms have the farmland and the supply to keep costs down since manufacturers are able to reduce costs when producing a product in larger quantities.

3) Post-harvest handling costs (processing and transportation) (economies of scale):

In order to avoid cross-contamination, organic produce must be separated from conventional produce after being harvested. Conventional crops are shipped in larger quantities since conventional farms are able to produce more. Organic crops, however, are handled and shipped in smaller quantities since organic farms tend to produce less, and this results in higher costs. Additionally, organic farms are usually located farther from major cities, increasing the shipping cost.

4) Organic certification:

Acquiring USDA organic certification is no easy — or cheap — task. In addition to the usual farming operations, farm facilities and production methods must comply with certain standards, which may require the modification of facilities. Employees must be hired to maintain strict daily record-keeping that must be available for inspection at any time. And organic farms must pay an annual inspection/certification fee, which starts at $400 to $2,000 a year, depending on the agency and the size of the operation.

5) Better living conditions for livestock costs more:

Higher standards for animal welfare also means more costs for organic farms. According to the Food and Agriculture Organization of the United Nations, organic feed for cattle and other livestock can cost twice as much as conventional feed. Not to mention bigger enclosures and increased medical costs by not using antibiotics normally used in livestock production.

6) Government subsidies are less for organic foods:

Production-oriented government subsidies reduce the overall cost of crops. In 2008, mandatory spending on farm subsidies was $7.5 billion while programs for organic and local foods only received $15 million, according to the House Appropriations Committee.

~ Authored and compiled by Masumi Shimonaka

Additional Reading:

Organic Foods vs. Non-organic Foods (which is better for you?)

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