The Profitability of Conventional Farming vs. Organic Farming

In the ongoing debate surrounding conventional vs. organic farms, one of the topics that has garnered a lot of attention is the question of which type of farming system reaps a larger profit- conventional or organic?  A common belief is that organic farms have smaller yields and therefore reap smaller profits.  Recent research and studies show that this might not be the case. There is hard statistical data that supports the conclusion that organic farms on the whole tend to be more profitable than conventional ones.

Recent Studies and Reports

The USDA census recently released findings that “the average organic farm was more profitable in 2008 than the average for all farms in 2007”.  Also, a recent comparative analysis conducted by the Food and Agriculture Organization of the United Nations, analyzed the reports and results from over 50 different studies (a large number from the U.S), which collected information from data sets ranging from five to five hundred farms.   The outcome?  The report concluded “the overwhelming majority of cases show that organic farms are more economically profitable, despite of frequent yield decrease”.

Side-by-Side Comparison of Organic v. Conventional Farm

The North Central Initiative for Small Farm Profitability, released a study that detailed one farming family’s transition to organic and then did a side by side comparison of this farm to a neighboring conventional one. The Cadas inherited a 400-acre conventional farm and were growing conventional soybeans, corn, and alfalfa. After being hired to move some organic produce, and getting a first hand view on the price the organic produce commanded at the market he decided to give organic a try. So he planted organic alfalfa on 27 acres that had been lying fallow.  The financial benefits-which were enough to purchase a new truck- prompted the Cadas to make a complete transition. Within five years the entire Cada farm was solely organic.

In the side by side profitability comparison of growing organic v. conventional soybeans and corn, it turns out that even though organic farms are more labor intensive, they are only slightly more expensive regarding direct expenses, but the gross receipts per acre is almost double that of conventional farms. It seems as if the slight decrease in yields are offset by the increased prices that organic foods command.  Combine this with only slight increase in direct expenses and it’s easy to see why organic farms are reaping higher profit than their conventional counterparts.

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