Monday, April 19, 2010

Does Organic Pay?

Just to state my position up front:
I don't believe organic cropping can match commercial/industrial farming on a per acre basis for a given crop over a period of years. The problem is that organic operations have to rotate crops.  Over a 10-year period a commercial producer in a corn/soybean rotation will produce more corn and beans than an organic one in a corn/soybean/alfalfa (maybe small grain) rotation.  That's assuming average weather. 

I do believe organic cropping is more productive if the weather is variable or extreme--more tolerance for droughts.

With that position, it's no surprise that I should appreciate this Purdue study. Their bottom line is that, if you do things right, organic can be as profitable or more profitable than commercial farming. The summary from farmgate:
When net returns per acre are written in four digit numbers, it does not take much imagination to realize that organic production can be profitable. However, getting there takes time and patience. After suffering through the transition period without price premiums, and taking the yield penalty, organic crops can become profitable with the help of higher prices and lower production cost. Key factors to success are timing of your crop rotation and finding a market for your crop.
In other words, as long as organic is a market niche commanding price premiums, it can be profitable once you make the transition.  But if it becomes mainstream, it won't be profitable.

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