Introduction on Economic benefits of organic farming
As a means of ensuring their financial survival, many farmers are moving to organic or “low input” farming. Numerous analyses of real grain farms in the central and northern states revealed that the economic performance of organic farming is on par with or better than that of conventional farming. Studies that fed yield data from research plots into economic models corroborate these outcomes. However, models that placed a greater emphasis on fictitious data indicated that organic farming would be economically disadvantageous. This might have happened as a result of the hypothetical models’ inability to take into account reasonable presumptions about the preservation and effective use of fuel, labour, capital, nutrients, and water. Because their systems are more diverse, established organic farmers are less susceptible to threats in the environment and the economy than conventional farmers.
However, they are also less able to benefit from income tax deductions. It is reasonable to anticipate that future trends in research, pollution control, input costs, and commodity pricing may affect conventional and organic farmers differently, but overall, organic farmers will likely benefit. There are numerous advantages to switching to organic farming on a macroeconomic (i.e., national) level. In addition to improving fish and wildlife habitats and ensuring the productivity of the land for future generations, it would lower federal costs connected with sustaining commodity prices, slow the depletion of fossil fuels, and lower societal costs related to erosion.
Future studies on the farm-level or microeconomics aspects of organic farming’s economics should focus on horticultural crops, southern latitudes, marketing, and the transition from conventional to organic farming. Future macroeconomic studies should measure the societal advantages mentioned above so that policymakers can contrast organic farming with alternative approaches. Farmers’ interest in organic farming has been progressively rising over the last 20 years. The health and safety of their families, customers, and livestock, as well as idealistic beliefs about soil and land stewardship, drove many farmers to adopt organic farming practices early in this time. More recently, hundreds of conventional farmers have started looking for ways to lower input costs as a result of rising chemical and finance costs and stagnating commodity prices. Though they may not identify with the organic agricultural movement, these economic pragmatists are heading in that direction. The new, socially acceptable phrase for organic farming is “low input farming,” and many newcomers are driven by the need to survive financially.
Three categories can be used to organize research on the viability of organic farming economically: 1) direct economic return comparisons between conventional and organic farms; 2) economic return analysis using research plot yield data; and 3) modeling economic return comparisons between conventional and organic farms. Unquantifiable financial gains from organic farming Real-world field data indicates that organic farming is more financially successful than what the models anticipate. The models’ stated presumptions appear plausible. Since it is challenging to incorporate differences between the two systems into models, an evaluation of the unspoken assumptions may prove illuminating.
The models presumed that there were no economic ramifications for any changes in soil structure, infiltration rates, and erosion rates between conventional and organic agriculture. According to some organic farmers, their soils are less compacted and have better tilth. Additionally, they assert that they save gasoline by running their tractors in a higher gear and consuming less power. Despite being believable, these assertions have not been thoroughly investigated. Improved ground cover and changes in soil structure resulted in a 10–50% reduction in runoff and a 10–25% increase in infiltration. When all of these elements work together, soil erosion in organic fields is reduced by at least two-fifths, and occasionally by more than four-fifths (Cacek, 1984).
The nutrients in the eroded soil and the water lost to runoff are difficult to quantify; for the most part, they are simply moved to other parts of the farm where they are still useful for growing crops. Certain nutrients are biochemically unavailable, while others are present in excess of what crops require. However, the prices of replenishing necessary nutrients and water may range significantly between conventional and organic farms. When evaluating the effectiveness of conventional and organic farms, vulnerability to natural disasters could be a significant consideration. Crops grown organically are susceptible to weeds and nitrogen deficits throughout the conversion stage.
There may be additional financial advantages to organic farmers’ varied crop varieties. Some protection against unfavorable price fluctuations in a particular item is offered by diversity. Improved seasonal input distribution is another benefit of diversified farming. It may take two tractors for a corn farmer to plant all of his acreage in the brief corn planting season. The rest of the year is spent using the tractors infrequently after then. One tractor might be enough for an organic farm of the same size because it would likely have less cornfields. Then, to grow wheat, hay, and other crops with spaced planting and harvest dates, the same tractor may be utilized in several seasons. Similarly, labor is used to a greater extent. Nonetheless, compared to specialized conventional farms, organic farms need more intense management.
For two reasons, organic farmers don’t require as much borrowing as conventional farmers do. Initially, organic farmers purchase fewer inputs, including insecticides and fertilizer. Second, diverse organic farms have more evenly distributed expenses and profits throughout the year. For instance, the corn harvest doesn’t need to borrow money if the proceeds from the wheat harvest in July are used to purchase gasoline. An economic drawback of organic farming may be lenders’ discrimination against organic farmers, according to complaints from farmers. Blobaum (1983), however, came to the conclusion that this issue is more perceived than actual.
In terms of the tax system, organic farmers typically face disadvantages over conventional farmers. In order to encourage investment, the U.S. tax code includes a number of provisions like interest deductions, accelerated depreciation, and investment credits. The use of irrigation systems, confinement feeding systems, and other investments that provide significant tax benefits is not prohibited by the concept of organic farming. However, the viability of confinement feeding systems is diminished by organic farmers’ unwillingness to employ preventative antibiotics. Because organic farmers rotate their crops more often and have more permeable soil, they require less irrigation. Since organic farmers typically have lower capital requirements, tax breaks are not as beneficial to them.
Researchers formerly thought that the refusal of organic farmers to apply fertilizers resulted in the loss of potassium, phosphorus, and other elements found in the soil, and that this loss would have negative long-term effects on the environment and economy (USDA, 1980). However, because organic farming reduces soil erosion and recycles manure, it might be claimed that it is a better approach for controlling components found in the soil (Cacek, 1984). According to research from Washington State (Patten, 1982), organic farming may even boost the soil’s biochemically available phosphorus content. These arguments highlight the potential financial gains from improved soil that come with organic farming.
Conclusions on Economic benefits of organic farming
An advanced alternative agriculture system is organic farming. There is ample evidence to infer that in the semiarid Northwest and the Corn Belt, it can economically compete with conventional farming. The economics of organic farming in different geographical areas and with horticultural crops require more investigation. Optimizing strategies for the transition to organic farming should receive special consideration. It is important to study organic farmers about their information needs and design information distribution systems that address those demands.
Reduced pollution and flooding, energy, soil, nutrients, fish, and wildlife conservation, decreased federal spending for grain price supports, and ensuring food supply for future generations are just a few of the many ways that organic farming greatly benefits society. Nonetheless, policy makers lack hardly any reliable data regarding the extent of these advantages, making it impossible for them to contrast organic farming with other possible policy options. Information about how organic farming affects rural communities, input suppliers, the food marketing chain, and worldwide traceability is also necessary for policy makers. Federal policy hurdles to conversion in places where organic farming is recognized to be economically viable should be identified and assessed. Lastly, it is important to examine how the 1985 Farm Bill and other laws have affected the financial sustainability of organic farming.
For both farmers and policy officials, organic farming presents a compelling option. Both will be able to take full advantage of this alternative with the advancement and dissemination of improved knowledge.