The Cost of Organic

by Eden Canon

The eye-watering disparity between the price of conventional and organic goods has influenced the perception amongst consumers that healthy, wholesome food is very pricey. But why does organic cost so much more?

In order to get to the bottom of this disparity, I talked with organic and sustainable meat, produce, and dairy farmers and produce buyers to discover the origins of cost in organic production.  There are some costs which are specific to the type of product, however many are effected by similar aspects of organic production. Organic grain, which has become a staple in farm animals’ diets as much as our own, is both a lower yielding crop than conventional and is shorter in supply, which makes it a more expensive commodity.  Small businesses that control their own supply chains do not have the luxury of buying in bulk or outsourcing to larger companies—both of which significantly reduce the cost of production.  Paying fair wages to agricultural workers, organic certification and insurance costs, supply and demand—all of these factor into the price of organic.

Organic feed

A bulk of the cost for organic meat, dairy and egg products come from the expense of supplying livestock with organic grain.  Two California dairy farmers, Mark McAfee of Organic Pastures and Albert Straus of Straus Family Creamery, explain how the shortage of organic grain crops has evolved in the US. “In all of the dairy states that I am aware of, dairy feed has become short and it is because agricultural markets have surged recently.  There is a lot of export availability for doing other long term crops like almonds, walnuts, pecans, pistachios and those kinds of goods that are easier to produce and have less input,” stated Mark McAfee. “As a result it has become harder and harder to get organic feeds.  People are trucking organic feed hundreds of miles to get it to their livestock.  So the biggest driver right now is the cost of feed.  Organic corn has doubled in the last couple of years.  It’s $400 a ton—it used to be $190.” Albert Straus described his experience with the increase in organic grain prices. “We’ve had a 40% increase in feed cost in between just 2010 and 2011.  Feed costs account for 50-60% of your income on a dairy—so it’s a huge expense.” Due to the short supply of organic grain currently experienced in the US, livestock farmers have had to import grain from across the country or overseas making it a more costly commodity when fuel prices are factored in.

Size matters

Marin Sun Farms is a meat supplier which sources from a variety of local farmers who produce humane, pasture raised meat.  David Evans, farmer and owner of Marin Sun Farms, raises 100% grass fed cattle as well as other pasture raised animals. Although David does not have the added cost of buying organic grain for his cattle, a diet of grass has its expenses as well. “If you’re feeding them on grass, it’s a much lower energy diet than grain. So they have to eat longer,” David explained. Feeding cows entirely on grass means that they will gain weight at a slower rate than cows that are fattened with bulky grain diets.  Grass fed cattle take approximately ten months longer to get to market weight than cattle that are fattened with grain. “That ten months is immensely costly when you have this thousand dollar animal tied up out there. You’re putting slow weight on it rather than fast weight. You could be turning over another animal there in the amount of time that you did that one. That’s part of it, waiting.  Of course, what comes with that is really good quality because older animals have better flavor, they’re more balanced. It’s just a better piece of meat; the quality is much higher.  Quality always costs more. That’s a fundamental of the marketplace.” “The other thing is, because of the size of our operation, all of the other costs to get that live animal to a state where we can sell it to you, is more expensive per pound.”  When David started his business he was dedicated to having control over his supply chain, ensuring that he had a hand in every part in the production of his product. “We’re totally integrated, but a lot of other companies will send it [livestock] somewhere to get killed, then they’ll send it somewhere to get cut and wrapped, then it’ll go to a distributor who will distribute it out to the supermarket. They just basically load the live animal in the truck, and it disappears down the train. That gets done cheaper because other people with economies of scale are doing the processing and distribution.” “So all of the processing fees, all of the cutting, the wrapping, the packaging, we do that on a small volume. Therefore, the cost per pound is much higher. As a matter of fact, I have trouble competing in the marketplace because there’s more people doing grass-fed meat now who are outsourcing all of their processing. We don’t outsource anything. We do everything ourselves, and that’s going to be costly. “

Organic inputs

The success of conventional farming lies in their GMO (genetically modified organism) varieties along with the use of petro-chemical based fertilizers and pesticides.  These inputs have all been made incredibly cheap and accessible to farmers, especially when bought in bulk. Mark McAfee explains, “organic fertilizer is expensive, and most people don’t have organic manure.  As a result you don’t have the hyper-stimulated growth that you would have from putting on cheap, petrochemical fertilizers/synthetic fertilizers.  And you’re not using GMOs and things like that.  So in a general statement, on an average of ten years, you do see organics doing better and better, but conventional will be cheaper to produce more tons per acre.” Organic farming requires more natural methods of farming including cover cropping, the use of manure as a natural fertilizer, natural herbicides, etc.  The price of these materials and the labor involved in applying them can be a costly endeavor. Simon Richard, produce buyer for Bi-Rite Market in San Francisco, sources his produce through direct relationships with local, organic farmers and has a wealth of experience when it comes to understanding the cost of organic produce.  Simon commented on the origins of this price disparity between organic and conventional farming: “Your nutrient inputs are going to be a lot more time consuming if you’re doing cover crops or different things to fertilize your field. More time is going to be more labor.” “I think that it also has to do with scale.  The larger you are the more likely you’ll be able to produce certain crops cheaper. If I was selling conventional onions right now then I could find them at the produce terminal for 15 to 20 cents per pound.” “At 20 cents per pound I don’t even know how a farm pays fair wages, harvests, ships the produce, buys the box, packs the box and sells it for that cheap. I haven’t been able to wrap my head around it.” “So I think it has a lot to do with the scale and the labor. I know my small farms that I deal with pay really, really good wages to their staff but when you get to the bigger farms—and even the big organic farms—you start to wonder.” Albert Straus commented on how farmers are affected by the artificially low prices that big agriculture and chemical and genetic farming can sell at. “There are now, in the United States, 51,481 dairies.  In 1992 there were 131,509.  We’ve lost an average of about 5% of our farms going out of business every year.” “It’s the price that farmers get paid—it’s not enough to cover your cost.  People just can’t survive. That’s what we’ve tried to change in the organic dairy industry, where we sell at a price where people can profit and sustain their businesses, and do it in a manner that, in my mind, is a more sustainable system—you can budget and you can improve your business and your practices.  You won’t have to push your animals so that they burn out.”

Insurance and certification fees

Insurance and certification fees are no small part of the budget.  Mark McAfee runs a raw dairy farm, a product which requires an extremely well organized and regulated process. “For the raw market, we are exceptionally costly because of the insurance requirements, the added labor, the short shelf life, the refrigeration requirements, and the intensive, intensive testing program that the state of California has us going through.  We’re the most intensely tested product I think of any agricultural commodity.” The cost of organic certification is yet another factor that plays a part in the price of organic goods.  Certification fees can range from the hundreds to the thousands and will often be passed onto the consumer through the price. Read about farmers’ qualms with organic certification.

Supply and demand

In a market where there is high demand for a commodity but short supply, it is not uncommon that suppliers will raise their prices because people are willing to pay more from the scarcity. Simon Richard commented, “There’s a little bit of supply and demand that effects the price.  For instance, we’re in asparagus season. There are a lot of conventional asparagus growers throughout California and down into Mexico. I don’t know exactly how the operations work, I’m a novice when it comes to growing asparagus, but I see it for like $1 to $1.99 per pound.” “It’s so cheap.  It’s usually stringy and the quality is usually not as good. If I want to get local organic asparagus, there are really only a handful of local organic asparagus growers, and they pay better labor, so it’s definitely going to cost more.” “Right now it cost me $4 per pound to buy organic asparagus because there are so few growers.  Compare that to the $1.99 to buy conventional.  Since it costs me $4 to get organic, I have to sell it for $5.99 because of this supply and demand thing.” “The whole conventional thing and how cheap stuff is, it blows my mind. A lot of times I just won’t buy it because it doesn’t add up to me. I just think that there is no way that this is sustainable.”

The real price of things

From a man whose job it is to put a price on food, Simon Richard gives an insider’s perspective on selling food at its real price.  “My job here is not to educate every customer that comes in about food production but I think it’s important for people to understand why things cost the way they do.” “Most of the time if something in my produce department is expensive, it’s not because I got it for cheap and I know that I can sell it for a lot so I jack up the price—it’s usually because I’ve spent a good amount to buy it from the farm and it’s the only way I can support the business and sell it.” “It’s a touchy subject because a lot of people don’t have money. The first step for them would be to just to eat fresh food and not processed food.  Then the next step might be more organic and seasonal. I think local movements continue to change this and get more relevant.”

The value of cheap food

When trying to decide the value of organic versus conventional, consider the costs beyond those of production, such as nutritional quality, environmental integrity, and fair wages for those who grow your food. Why did your mom always tell you to eat your broccoli, or to finish your plate of peas?  She nagged you to eat your greens because vegetables and fruits are good sources of nutrients vital to our health. The type of farming used to cultivate produce greatly affects its nutritional content.  Conventional farming is a process of over-tilling which causes soil erosion and reduction of the soil’s ability to retain water.  This method of farming also entails excessive use of synthetic fertilizers and pesticides.  These practices destroy the microorganisms in the soil, without which plants cannot absorb important minerals and nutrients, such as phosphates. Essentially, this style of farming reduces the nutritional value of your fruits and vegetables.  You’ve experienced this first hand if you’ve ever had a conventional tomato next to an organic tomato.  After biting into both, you will immediately notice the stark contrast between the two.  A conventional tomato is often watery and starchy whereas an organic tomato is juicy and practically falls apart when you cut into it. When your fruits and vegetables don’t even have the nutrients to make up for the lack of flavor, what are you paying for? Read our top tips on buying ethical food on a budget here.