Organic food is considered more nutritious. However, some people need to understand why organic food is more expensive. The reason for this is that the cost of organic farming is higher. In addition to that, consumers demand organic food more. The following are the costs of organic farming: (1) Organic certification, (2) Organic production, (3) Increased demand among consumers.
Cost of organic certification
Several programs are available to help producers with the costs associated with organic certification. The USDA’s Organic Certification Cost Share Program (OCCSP) and the Organic and Transitional Education and Certification Program (OTECP) combine to provide reimbursement for up to 75% of the total cost of organic certification. OTECP funding is based on the size and nature of an applicant’s operation. The fees vary between certifying bodies and can be expensive for a small farm. Private certifying bodies, for instance, tend to charge based on gross farm sales. For a small farm with a gross sales volume of $5,000 to $10,000, the fee would be $434.
For a larger farm, selling more than $125,000 worth of organic products per year, a farm would pay $2,517 plus 0.1% of its total sales. The cost of organic certification may be prohibitive for some small farmers. But it has several benefits. For example, organic farming reduces pesticide exposure for many low-income agricultural communities and protects pollinators. It also promotes climate-friendly farms and helps support young and socially disadvantaged producers. These producers often can’t afford organic farming, and this cost-share program can help them afford the certification fees.
The USDA’s Organic Certification Cost Share Program is integral to the National Organic Program. It has been helping organic farmers reduce financial barriers for nearly two decades. This program has reimbursed farmers up to 75% of the cost of organic certification. This financial aid is essential in times of COVID outbreak. It helps organic farmers access key markets and food service operations.
Cost of producing organic food
Organic food is generally more expensive than conventionally grown foods because organic farming requires more labor and pesticide management. Farmers also spend more time protecting their croplands and practicing crop rotation, which builds soil fertility. Organic food is typically more expensive, but many consumers are willing to pay the higher price. The cost of producing organic food varies based on the size of the organic farm. Large conventional farms can produce 25,000 to 30,000 pounds of milk annually, while small organic farms produce about half that.
Organic farmers also must pay certification fees on an annual basis, which vary based on the size of the operation. Another factor contributing to the cost of organic food is that organic farms are typically smaller than conventional farms. These farms lack the economies of scale that large operations enjoy, so their products may cost 20 percent to 100 percent more than conventionally grown food. Organic farms also have more staff and must clean up contaminated water.
While conventional food prices are already high, there is an increasing demand for organic food. The global market for organic food is growing by 17.6 percent per year, and in Canada, it is estimated to be worth $5.4 billion a year. In 2017, Albertans bought more organic food than any other province. According to Statistics Canada, seventy-four percent of Albertans purchased organic food weekly. With the demand outstripping supply, organic food prices are higher than ever.
Consumer demand for organic food
Organic products tend to be more expensive than their non-organic counterparts. The demand for organics has increased in recent years, outpacing supply in many categories. A recent study by the Organics Consumer Association (ERS) shows that the price premium for organic products is more than 20 percent higher. However, this premium fluctuates. In one-year, organic prices dropped, and in the next, premiums rose. The study also found that many consumers are unwilling to pay more than 30 percent more for organic foods. One reason for the price premium is that organic food producers don’t use cheap additives, flavors, or preservatives.
Because these ingredients are prohibited in organic food, organic producers must use more expensive, less harmful ingredients to make their products. Organic food producers often must use ingredients that are harder to come by, which makes them more expensive. Fortunately, organic food manufacturers are starting to offer their products at mainstream retailers. The demand for organic food is increasing, with sales at significant grocery stores reaching $39.9 billion last year. Because of the growing demand, even big-box stores have begun stocking organic food on their shelves. Wal-Mart, for example, has partnered with Wild Oats Marketplace to sell more organic products on their shelves.