The United States Department of Agriculture estimates that 1.7trillion dollars was spent on food and beverages in the US in 2019. 50.07 billion dollars out of the 1.7 trillion was spent on buying organic food. To put this in perspective, only about 0.03% of the total money spent on food went to Organic food in that year.
Organic products are products that are produced under environmentally friendly conditions, devoid of chemicals and artificial additives. These products have over time gained popularity with farmers and consumers alike making a shift towards organic growing and feeding.
Organic products are usually more expensive than conventional products. Sometimes, the price difference could be as high as 20% or even more.
I know what’s running through your mind. If over 90% of the food eaten in the US is grown conventionally, then why is organic food so expensive? Well, let’s delve a little into the world of business to get a glimpse of why Organic food costs more.
1. Organic fertilizers cost more
Organic farmers make use of natural fertilizers in crop production. Unlike conventional farmers who make use of synthetic fertilizers, organic farmers rely on compost and animal dung.
These natural fertilizers will usually take a longer time to produce and can be of lower availability compared to chemical fertilizers. Making a proper compost pile can take anywhere between 6 weeks to more than a year whereas, chemical fertilizers are usually made in a factory within days. Just to add, How much poop can livestock produce to fertilize all the organic farms? Yea, right!
With the extra cost of organic fertilizer, it is easier to understand why organic products are expensive.
2. Organic Products are in higher demand
In economics, the demand and supply of goods have a huge influence on the price of those goods. When a product is in high demand, its price increases. This is true for most goods such as houses, cars, and many other commodities. Of course, food is not left out on the list.
The organic market has seen a constant increase in demand and supply in the last decades. In 2020, the demand for organic food in the US grew by 12.4%.
Over the years, people have come to trust the health and nutritional benefits of eating organic products. This has led to rising demand for organic foods. Noting that organic products are not as abundantly available as their conventional counterpart, it is only normal for the demand to affect the price of organic food.
3. Slower growth rate
Organic farms typically operate at a slower pace compared to conventional farms. This is because they are not solely focused on maximizing output but also focused on environmental and healthy farm practices. As a result, organic farms take on more risks than conventional farms.
In conventional farming, artificial growth hormones are introduced to accelerate the growth of farm products. This enables conventional farmers to give more outputs in shorter periods thereby raking in higher profits. This however isn’t the case for organic growers.
Due to the laws guarding organic farming, organic farmers are prohibited from using artificial growth enhancers. This means that all organically grown produce has to follow the natural growth process. This limits the frequency of output for organic farmers thereby limiting profits. This in turn makes organic products more expensive.
4. Organic feeds cost more
Because of the slow growth rate and nutritional demands of organic products, organic farmers have to make use of higher-quality feed for their animals. This could be in the form of grasses or meal mixtures. The fact is that a single feed source can only provide limited nutrients for livestock compared to mixed feeds.
To supply the needed vitamins and minerals for healthy animals and soil, organic farmers have to make use of other products such as sea kelp and rock powders among others. Given that these products are not readily available and cost a lot, Farmers are forced to consider these costs when determining the price of their produce.
Costly feeds will only lead to end products that are also more costly.
5. Organic farming is more labor intensive
Organic farming requires much more labor compared to conventional farming. This is because most of its practices require the use of controlled environments and less use of mechanized equipment.
In most cases, organic farmers control pests and weeds by uprooting and hand-picking insects. These practices require manual laborers who must be paid wages. This can be a very costly venture.
Organic farmers are not able to increase output by simply adding more inputs such as fertilizers and pesticides. They need to hire a team of cultivators who work manually in order to limit chemical use. This will leave them with a healthy product that has no chemical residues left.
Considering the labor costs involved, one can understand why organic products are more expensive than regular products.
6. Economies of scale
Economies of scale refer to the cost advantages that businesses gain from larger levels of production. Confusing right? OK, let me break it down. Using one dozen lemons to make one big batch of lemonade will cost you less than buying one lemon 12 times and making 12 batches of lemonade.
That’s a simple example of how buying and producing large-scale costs less than buying and producing on small scale.
Most organic farms are smaller scaled. This is because of the physical labor required to make organic farms productive. Conventional farms on the other hand are mostly Larger scale industrial farms that make use of heavy machinery and chemicals to scale production.
Organic farms don’t need to make use of large machinery and equipment that would only drain the investments made on them. The lack of a large-scale infrastructure will also allow them to work with smaller land spaces.
7. Organic certifications cost more
Organic certification processes are regulated by government organizations. The government sets strict regulations for organic farms in terms of land management, animal feed, and production practices. These policies and procedures can lead to certifications that are very costly.
These certification costs are often added to the prices of consumer products making organic items more expensive than their conventional counterparts.
8. Post-harvest handling cost
Organic foods must follow strict regulations which are controlled by the government. These food items are held to the same standards as other foods but they work in ways different from conventional farms.
Organic storage and transportation require stricter policies than conventional storage. For example, Organic produce is mandatorily required to be kept separately from conventional goods. The purpose is to limit the contamination of organic food with chemicals from conventional food production.
In organic production, everything is handled in a more careful manner. Organic goods need to be packaged and transported carefully to ensure that they remain fresh. This attracts a higher cost for the storage, packaging and transportation of these products.
9. Shorter shelf life means fresher produce
The longer food stays on the shelves, the more nutrient they lose. Due to the limited use of chemicals, organic products have fewer preservatives added to them. For this reason, organic products have a shorter shelf life. What this means is that any organic product you see on the shelf is mostly fresher than its conventional counterpart.
For example, strawberries can last for a few days after being picked. However, when they are farmed using synthetic pesticides and fertilizers, the shelf life is greatly extended.
The longer time these items are on the shelf, the less quality and freshness they will have. It makes sense that fresher products should attract higher prices.
10. Less profitable farming practices
Organic farmers make use of various farming practices that help enhance soil fertility. For example, mixed cropping and crop rotation are common practices among organic farmers. This limits how much of a particular cash crop they are able to cultivate at one time.
In many cases, they plant crops that may not be profitable for them when grown on a small scale whereas, the goal is in making the soil healthy enough to grow other vegetables.
Such practices not only limit the yield of the crops but also reduces the profit margin of organic farmers. This affects the price of the product which ends up higher than that of conventional products.
Despite the higher cost of organic produce, many organic farmers eventually make lower profits than their conventional counterparts. It takes a lot of courage to be an organic farmer having to labor immensely and still get less profit however, the merits of organic farming far outweigh the demerits.
More nutritious and clean food, a better ecosystem, preserved biodiversity, and a healthy environment are priceless gains and good value for your extra buck if you ask me.
The next time you go to the supermarket and see that high price tag on that organic label, do not think they are ripping you off. Just think of all the efforts that went into producing that product. It is a little price to pay for a healthy body and a healthy planet.
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