Farmers abandoning organic farming despite lure of higher price premiums

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The Internet is awash with reports claiming that organic farming is more profitable for farmers than conventional agriculture. The latest spate of posts was based on a study recently published in PNAS by Washington State University researchers who found a price premium of 22 to 35 percent over the same conventionally grown food, despite yields that were 18 percent lower for organics.

This report echoes the conclusions of a 2009 UN Food and Agriculture Organization (FAO) study, which also pointed to the “non-economic benefits” of organic agriculture–it’s supposed sustainability benefits.

But the claims of improved profitability for farmers run up against some hard facts: organic farming in the West is far from booming, even as sales of organic foods are increasing sharply, albeit from a very low base. If there’s so much money to be made in organics, then why aren’t more farmers switching?

Declines in organic farms

While the consumer demand for organic food is rising, there are 16,525 organic farms in the U.S., only 0.8 percent of all farms. Most organic farms also are small—in Washington state, 30 percent of organic farms had less than $25,000 a year in sales, while just 9 percent had more than $1 million. The USDA also has found that most organic farms tend to be smaller (which it measures by having less than $250,000 in sales).

The U.S. Department of Agriculture does not keep data on farms that have dropped out of the National Organic Program, and changes in data collection between 2007 and 2012 make it nearly impossible to make that kind of comparison (for now—the USDA is conducting surveys that could reveal more data this or next year).

But other studies show a wobbly, at best, support for organic farming by farmers themselves. A 2010 study by Washington State University found that organic certifications in the state dropped by 18 (to 735), while five farms became certified organic. More recent state data shows that the number of organic farms has dropped slightly again in 2013, and acreage devoted to organics also dropped.

In 2007, the California Institute for Rural Studies found that while 600 farmers entered that state’s organic program (California’s the only state with its own organic registration process), 523 farmers dropped out of the program between 2003 and 2005 alone.

Just last month the UK Guardian carried an article titled “Why are organic farmers across Britain giving up?” detailing the plight of organic farmers who are being squeezed despite the sharply higher prices paid by consumers for organic food:

Darren and Julia Quenault took their first delivery of non-organic cattle feed a few weeks ago. After nine years of organic dairy farming, they decided to convert back to conventional, and give up their organic status, at the end of last year.

The Quenaults are not alone. Even as demand for organic food remains high, the farmers producing it are falling by the wayside. … UK government figures show that while organic food sales have bounced back from the low that followed the 2008/9 financial crash, the amount of land being farmed organically in Britain continues to shrink. In 2013, the last year for which data are available, land in the process of being converted to organic fell by 24 percent, with fully organic land falling by 3.9 percent. The number of producers and processors of organic food fell for the fifth year in a row, by 6.4 percent, and the number of organic sheep, pigs and cattle also fell.

What do farmers say?

The Quenaults say the reason they switched came down to simple economics. “Cattle feed costs were excruciatingly expensive and we just couldn’t absorb them,” says Julia. “We’re saving £1,800 a month. We couldn’t have continued, we would have had to put up prices significantly, and we didn’t feel we could burden consumers with an extra 12 percent on the price of milk.”

Interviewing farmers also has turned up revealing patterns in what farmers adopt, reject or abandon organic farming. Jeff Murray, a marketing professor at the University of Arkansas, and his colleagues found that significant numbers of farmers were resisting organic farming, despite the supposed allure of premium profits. In the study, they found that ideology, especially among conventional farmers, was the primary driver to switching to or rejecting organic:

  • Conventional farmers saw themselves as better planners, more scientific, and embracing minimal tilling and “chemical applications” to increase yield.
  • Meanwhile, organic farmers saw themselves as farming like their grandparents, spending more time in the field but seeing soil as an ecosystem.
  • Conventional farmers saw organic farmers as unscientific, and following “an organic crop guru.”
  • Meanwhile, organic farmers perceived conventional farmers as lazy, “leaving it all up to the co-op to make decisions for them.”
Related article:  Viewpoint: Crop biotech advocates should stop pushing organic industry to embrace gene editing

Aside from these perceptions, conventional farmers said they’d consider some organic practices if they paid off.

For many farmers, organic practices as a whole do not always translate to higher profits. One of the obstacles is the same thing faced by conventional farmers, including those who use genetically modified seeds: what farmers see as over regulation. A study by the University of California found that 38 percent of organic farmers listed regulatory burdens as their chief challenge.

“These included paperwork and record keeping for certification, inspections, finding a third-party certifier, and the cost of certification,” the study said.

The certification process is quite involved. Under the USDA National Organic Program (NOP), any applying farm must go through a transition period of three years, during which it cannot sell any product as certified “organic.” However, the farm is supposed to be changing its practices to organic during this time. Once certified, a farmer has to pass inspections, and document that his or her farm is following all the rules governing organic farming.

Input costs are not cheap, either, sometimes exceeding those for conventional farming. Labor costs can be significantly higher for organic farming. For example, many conventional farmers grow GMO Bt crops, which require almost no insecticide spraying while organic farmers with pest problems must spray their crops regularly, which requires extra labor. Any conventional farmers growing herbicide tolerant crops have to weed far less, another labor saving innovation over organic farmers.

One organic farmer in a California study told researchers “This is all labor. I’ve had a few partners that backed out once they saw they had to spend $1,800 an acre weeding spinach compared to $150 an acre in conventional.”

Meanwhile, an organic farmer in Ventura County, California, told the researchers that “when I farmed conventionally, I had six employees on 300 acres. Now that I’m farming organically, I have 15 employees on 30 acres.”

Too much woo?

Other farmers have abandoned organics because they see the movement as more like a religion than focused on agricultural science. Mike Bendzela, a former organic farmer in Maine, recently likened the philosophy of the organics movement…

…to a barrel raft covered in loose planks. In trying to justify their beliefs, the pile on the claims (planks), each of which rests on a different assumption (barrel). And when one claim is questioned, they simply jump to another plank on the raft and try to hold it all together.

Bendzela recounted attending a Maine Organic Farmers and Gardeners Association fair, and encountering “Whole Life Tent,” replete with “reflexologists, naturopathic doctors, homeopaths, Reiki practitioners… I was unsure what any of this had to do with agriculture.” What they were: “a necessarily evil to get non-ag types of attend. This disorder is not limited to the fairgrounds.”

Prices don’t stay the same

One looming question is whether the organic price premium will last. According to the Washington State University report: “The actual premiums paid to organic farmers ranged from 29 to 32 percent above conventional prices. Even with organic crop yields as much as 18 percent lower than conventional, the breakeven point for organic agriculture was 5 to 7 percent.” According to the researchers, that means that organics could still be profitable even at much lower premiums.

However, if adoption of some organic practices (crop rotation and multi-cropping in particular) are adopted by conventional farmers, the “yield” gap between organics and conventional crops, already significant, grows even wider. It’s not even clear that current premiums are even covering the higher costs of organic farming (while the Washington State group notes that premiums have held steady for 40 years, organic food has only been an organized entity for less than 20). In fact, genetically engineered foods are largely responsible for the ability to yield more crops on less land, according to the USDA. With changes in supply and demand come changes in prices. At least, farmers are more than a little skeptical of the sustainability of profits, much less products.

Andrew Porterfield is a writer, editor and communications consultant for academic institutions, companies and non-profits in the life sciences. He is based in Camarillo, California. Follow @AMPorterfield on Twitter.

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