[MCN] Update on viability of organic agriculture

[Lance Olsen]

PNAS early edition Published online before print June 1, 2015
doi: 10.1073/pnas.1423674112

Financial competitiveness of organic agriculture on a global scale
David W. Crowder and John P. Reganold

Significance
Some recognize organic agriculture as being 
important for future global food security, 
whereas others project it to become irrelevant. 
Although organic agriculture is rapidly growing, 
it currently occupies only 1% of global cropland. 
Whether organic agriculture can continue to 
expand will likely be determined by whether it is 
economically competitive with conventional 
agriculture. Accordingly, we analyzed the 
financial performance of organic and conventional 
agriculture from 40 y of studies covering 55 
crops grown on five continents. We found that, in 
spite of lower yields, organic agriculture was 
significantly more profitable than conventional 
agriculture and has room to expand globally. 
Moreover, with its environmental benefits, 
organic agriculture can contribute a larger share 
in sustainably feeding the world.

Abstract
http://www.pnas.org/content/early/2015/05/27/1423674112.abstract
To promote global food and ecosystem security, 
several innovative farming systems have been 
identified that better balance multiple 
sustainability goals. The most rapidly growing 
and contentious of these systems is organic 
agriculture. Whether organic agriculture can 
continue to expand will likely be determined by 
whether it is economically competitive with 
conventional agriculture. Here, we examined the 
financial performance of organic and conventional 
agriculture by conducting a meta-analysis of a 
global dataset spanning 55 crops grown on five 
continents. When organic premiums were not 
applied, benefit/cost ratios (?8 to ?7%) and net 
present values (?27 to ?23%) of organic 
agriculture were significantly lower than 
conventional agriculture. However, when actual 
premiums were applied, organic agriculture was 
significantly more profitable (22-35%) and had 
higher benefit/cost ratios (20-24%) than 
conventional agriculture. Although premiums were 
29-32%, breakeven premiums necessary for organic 
profits to match conventional profits were only 
5-7%, even with organic yields being 10-18% 
lower. Total costs were not significantly 
different, but labor costs were significantly 
higher (7-13%) with organic farming practices. 
Studies in our meta-analysis accounted for 
neither environmental costs (negative 
externalities) nor ecosystem services from good 
farming practices, which likely favor organic 
agriculture. With only 1% of the global 
agricultural land in organic production, our 
findings suggest that organic agriculture can 
continue to expand even if premiums decline. 
Furthermore, with their multiple sustainability 
benefits, organic farming systems can contribute 
a larger share in feeding the world.

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"On the other hand, maybe when Malaysia's prime 
minister spoke about transforming the country 
into a developed nation, he meant that it really 
had to suffer through a deep real-estate 
recession, like those experienced by the U.S. and 
the U.K."

Barron's, August 12, 1996. "Thriving Malaysia 
Propels an Office-Tower Boom In Its Biggest City, 
and You Know What Follows a Boom," Steven Bergman.
===============================================================================
"Bank panics invariably reveal the poor quality 
of lending that accompanied the preceding boom."

Edward Chancellor
"Panic passes but the causes remain"
Financial Times, October 14 2008
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"Housing markets are notoriously prone to boom 
and bust. Š.. After a big boom, the housing bust 
will be a wrenching affair."

The Economist, Boom and Gloom. May 18, 2013




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