Organic Farming and Conventional Farming

Part
01
of three
Part
01

Organic Farming vs Conventional Farming: Yield

A survey report from the U.S. Department of Agriculture (USDA) indicated that yield in organic farming is less compared to conventional cropping. Some factors and insights around their comparative analysis are discussed below.

COMPARATIVE ANALYSIS: ORGANIC VS CONVENTIONAL CROPPING

1. Organic Yields Lower Than Conventional Cropping

  • According to the USDA survey report, the long term experiments in Iowa, Pennsylvania, and other states in the US for a per acre/bushel field area, indicated that organic farming yield is less compared to conventional cropping. The "organic corn yields to be 41 bushels per acre less than conventional yields, organic wheat yields to be 9 bushels per acre less, and organic soybean yields to be 12 bushels per acre less."
  • The yield differences revealed by the survey report between the organic and conventional cropping was estimated due to the unique problems encountered by organic systems, such as effective weed control, seed varieties and high percentage of organic growers who use lower yielding food-grade varieties.
  • The organic versus conventional cropping yield gap for row crops was highest in cotton (45%) and flex seeds (43%); for tree nut and vine crops-cranberries (67%) and vegetable crops-spinach (71%) for per acre area.
  • The Grist article highlights that the best apple-to-apple comparative studies have shown that organic farming for per acre land generally yields 20-30% less than conventional monocropping.

2. Land Upstream for Production

  • The Grist article states that the organic agriculture requires more land upstream of production which affects the production cost as the farmer has to grow nitrogen fertilizer before he can grow food which is not in the case of conventional agriculture which takes up more space downstream from production.
  • The USDA survey report states that the mean operating and operating plus capital costs per acre for crop production were generally less for organic than for conventional farms. The organic producers had higher fuel and capital costs per acre of farm because they used more field operations, particularly for tillage/land upstream.
  • The additional economic costs of $83 to $98 per acre for corn, $55 to $62 per acre for wheat, and $106 to $125 per acre for soybeans are incurred from organic production in comparison to conventional cropping.

3. Pesticide Residue

  • The USDA Pesticide Data Program (PDP) database identified that the pesticide exposure estimates for organic food produced per kcal was recorded to have lower concentrations in comparison to conventional food produced. It was found that the organic foods have around one-third of the pesticide residues of conventionally grown produce.
  • In the point of view concerning health factors, organic foods are considered to be safer by most consumers due to its lower pesticide exposure and even pay premium price for these products.
  • The study by Research Gate states that the organic farming, although uses frequent pesticide applications along with synthetic fertilizers, gains more retail price of organic products as compared to conventional food produce due to the higher perceived nutritional content in the output.

OTHER HELPFUL FINDINGS

  • In the US, the organic production has 0.6% of the total land share (4.9 million acres) with certifiable organic operations found in every state.
  • It is found that even though the amount of land dedicated to the production of organic goods is low in comparison to its conventional cropping, consumer demand is high.
  • The overall organic market in the US reached $39.7 billion in retail sales representing 47% of the global organic market, accounting for nearly 5% of all food sales in the U.S.

Research Strategy:

In order to identify the three key insights into the comparative analysis of organic versus conventional cropping in reference to yield in the US, we initially searched through market research reports and publications from credible forums including Research Gate, the U.S. Department of Agriculture, NCBI, Our World in Data, IOPscience and others, to check any directly available comparative analysis in this topic.

Through the search, most of the information identified from multiple sources where related to global comparatives for the overall organic versus conventional cropping systems based on its advantages and environmental impact. Hence, through the available data, we extrapolated the relevant findings related to the three key insights which shared comparative analysis in reference to the yield/output for the US organic and conventional cropping and is based on a similar metric for farms (size/revenue).

The key insights listed above were included as they were highlighted in more than one credible source and are based on the comparative metric of size (per acre/per bushel) of the farm referred. Reports from Research Gate, USDA survey, and Grist organization highlighted that organic farming yields are lower than conventional cropping with references for per bushel of corn, wheat, and soybean farms has been provided. Also, the sources highlights that the land upstream production in reference to output for comparatives of organic versus conventional cropping for per acre land is higher in organic farming. Additionally, the key insight from the above sources indicated that the pesticide residue for the per kcal of food produced from organic cropping versus conventional cropping is found to be less in organic products which in turn helps in achieving higher premium/retail price for organic products. An old source from Grist organization article has also been added as it contained multiple key insights and findings related to the comparative analysis of organic versus conventional cropping in reference to output and no such similar source with relative findings could be found from recent years.

Part
02
of three
Part
02

Organic Farming vs. Conventional Farming: Crops

In terms of yield, cotton (44%), cranberries (67%), and spinach (71%) have the highest yield gaps among various crop segments in the U.S. In terms of profit, corn and soybean have the highest profitability in organic farming as compared to conventional farming.

COMPARATIVE ANALYSIS OF CROPS' YIELD IN ORGANIC CROPPING VS CONVENTIONAL CROPPING

U.S. ROW CROPS WITH THE HIGHEST ORGANIC YIELD GAPS:
  • Cotton: 45%
  • Flaxseed: 43%
  • Rice: 39%
  • Peanuts: 37%
  • Corn for grain: 35%
  • Dry edible peas: 35%
  • Lentils: 35%
  • Spring wheat: 34%
  • Barley: 33%
  • Soybeans: 31%

U.S. TREE NUT AND VINE CROPS WITH THE HIGHEST ORGANIC YIELD GAPS:
  • Cranberries: 67%
  • Figs: 64%
  • Strawberries: 61%
  • Tangerines: 58%
  • Grapes: 49%
  • Walnuts: 48%
  • Almonds: 43%
  • Blackberries: 42%
  • Hazelnuts: 38%
  • Grapefruit: 32%

U.S. VEGETABLE CROPS WITH THE HIGHEST ORGANIC YIELD GAPS:

PROFITABILITY

  • The difference between net returns per acre for organic versus conventional production of corn was $51 to $66 per acre.
  • The difference between net returns per acre for organic versus conventional production of soybean was $22 to $41 per acre.
  • The difference between net returns per acre for organic versus conventional production of wheat was -$9 to -$2 per acre.
  • In case of a corn-soybean-oat/alfalfa-alfalfa rotation on a farm, the net returns of 4-year organic farming were $267/acre as compared to $273/acre for its 4-year conventional counterpart.
  • However, when a full premium is applied to the same, the average net return from organic production increases to $538/acre which significantly outperforms the conventional systems in terms of profitability.
  • Factors affecting the profitability of organic farming include crop yields, price premiums for organic products, labor costs, the potential for reduced income during a transition period from conventional to organic production, and potential cost savings from the less use of nonrenewable resources and purchased inputs.
  • In the United States, consumers of organic produce typically pay a premium of 32% over conventionally grown produce.
  • Organic farming is equally or more profitable than conventional farming on account of premium prices paid by consumers.

RESEARCH STRATEGY:

We started the research with directly searching for any research studies or industry reports around comparative analysis of organic cropping versus conventional cropping in terms of yield and profitability for specific crops. We came across a report published by the United States Department of Agriculture (USDA) which provided a comparative analysis in terms of yield and profitability of 3 crops namely, corn, wheat, and soybeans in the U.S. Further, we came across another study published by Science Daily which provided a comparative analysis of organic vs conventional cropping for a farm with corn-soybean rotation.

Secondly, we searched for any media articles and publications that would provide any industry news around this topic. We came across an article published on Forbes which provided a detailed analysis of yield difference for various crops in organic vs conventional farming in the U.S. However, the article did not provide detailed information for specific crops in terms of profitability. In addition, we came across another article published by Food Tank which provided information on the overall profitability in organic vs conventional farming in the U.S. However, the article did not provide detailed information for specific crops.

We also tried searching for providers of organic farming products. The idea here was to find any cost benefit analysis published by such providers that would provide any comparative analysis of organic vs conventional farming for specific crops. However, websites, press releases, and other publications of providers including but not limited to Monsanto and Natures Path only provided generic information on organic farming and did not provide any useful information on comparative analysis of organic cropping versus conventional cropping in terms of yield and profitability for specific crops.

As our last resort, we also searched for any published testimonials and interviews on farmers that could provide any useful information. The idea here was to find any interviews of farmers who have switched from conventional farming to organic farming (or vice versa) and have shared their farm’s yield and profitability details. However, most of the interviews found such that from Modern Agriculture only provided generic information on why and how farmers have switched to organic farming from conventional farming and no information could be found on the comparison of yield and profitability for specific crops.

After exhausting the above-mentioned strategies, we were able to find a comparative analysis on numerous crops in terms of yield in the U.S. However, due to the limited information found in terms of profitability for specific crops (aside from corn, wheat, and soybeans), we pulled together other general insights and other helpful findings on profitability as presented above.

Part
03
of three
Part
03

Organic Farming vs Conventional Farming: Profitability

The profitability of organic is considerably higher than that of conventional cropping. It is estimated that organic farming brings in up to 35% more profit to farmers, when compared with conventional cropping.

Profitability of organic cropping versus conventional cropping

  • According to a 2018 meta-analysis, which includes investigating findings from across the academic community in the last 10 years, it is estimated that organic farming brings 10–18% lower yields, which are usually recovered through price premiums that are often associated with organic farming.
  • Overall, according to another meta-analysis, organic agriculture is considered to more profitable, with up to 35% more profitability recorded when compared with conventional cropping.
  • The profitability of organic farming is dependent on consumers being willing to pay a price premium. Overall, a 5–7% price premium is required in order for the profits of organic farming to be the same as in conventional farming, while the current actual premium is around 30%, which allows for the profit margin to actually rise above the conventional farming profit margin.
  • The profitability of organic farming also depends on the crop types. For example, due to 45% lower costs and higher sales margins, organic basmati cultivation has been 105% more profitable in the last five years when compared with cultivating ordinary rice under conventional management.
  • However, the profitability per crop doesn't necessarily correlate with overall profits increasing for organic farmers. Organic farming typically gives less product, around 19-25% less, which then brings out the efficiency difference and can undermine the profitability aspect, based on the type of crop.
Sources
Sources

From Part 01
Quotes
  • "USDA survey data show that organic systems had lower yields and higher total economic costs than conventional systems."
  • "Despite potentially higher returns, adoption of the organic approach among U.S. field crop producers remains low, likely due to low crop yields and challenges of effective weed control, among other factors."
  • "These data show organic corn yields to be 41 bushels per acre less than conventional yields, organic wheat yields to be 9 bushels per acre less, and organic soybean yields to be 12 bushels per acre less."
From Part 02
Quotes
  • "Data from long-term cropping system experiments in Iowa, Pennsylvania, and other States suggest that organic crop production can bring significant returns."
  • "Estimates of the average difference in net returns per acre for organic versus conventional production were positive and highest for corn ($51 to $66 per acre), followed by soybeans ($22 to $41 per acre), but negative for wheat (-$9 to -$2 per acre)."
  • "The main reason that organic returns were higher than conventional returns was the price premiums paid for organic crops. "
Quotes
  • "What gave organic production the edge wasn't higher crop yields, however; instead it was organic price premiums. "
  • "In their absence, the net return from a 2-yr, conventional corn-soybean rotation averaged $342 per acre, compared to $267/ac for a 4-yr organic rotation (corn-soybean-oat/alfalfa-alfalfa), and $273/ac for its 4-yr conventional counterpart. "
  • "When a full organic premium was applied, though, the average net return from organic production rose to $538/ac, significantly outperforming the conventional systems both in terms of profitability and risk. "
  • "And organic production was still more profitable when the price premium was reduced by 50%."
Quotes
  • "The productivity of organic farming is typically lower than that of comparable “conventional” farms. This difference is sometimes debated, but a recent USDA survey of organic agriculture demonstrates that commercial organic in the U.S. has a significant yield gap."
Quotes
  • "The good news is that there is room for organic agriculture to continue to spread, and the authors predict that profitability of organic farming will continue to outpace conventional models."
  • "According to the authors, many factors can affect the profitability of organic farming, including crop yields; labor costs; price premiums for organic products; potential for reduced income during a transition period from conventional to organic production; and potential cost savings from the reduced use of nonrenewable resources and purchased inputs. "
  • "The cost-benefit analyses incorporated all of these factors, and the authors concluded that organic agriculture is more profitable than conventional agriculture."
  • "In the United States, consumers of organic produce pay a typical premium of 32 percent over conventionally grown produce. But the researchers found that even if premiums fall to lower levels as sales continue to grow, organic agriculture will likely keep its competitive edge due to consumer demand."
Quotes
  • "There are a solid base of studies that suggest organic is equal to or more profitable than conventional farming. "
  • "Part of that competitive edge comes from the premium price – driven by consumer demand – that organic farmers can get for their products (though even when profits are adjusted for 50 per cent of the current organic premium, most studies still show organic agriculture coming out ahead"
Quotes
  • "Although the article was published in 2017, it provides useful insights in answering the client's question. Since no other recent article could be found that would provide similar information, this has been included in the response."