Why does organic farming cost more?

Are organic foods more expensive?

Customers generally have to dig deeper into their pockets for organic food than for conventionally produced food. The higher price comes about because the effort involved in producing, processing and distributing them is greater. However, if you compare the prices of organic food with the prices of conventional premium brands, the differences are already smaller. And: while products from conventional agriculture cause negative external environmental costs, organic food costs more at the checkout, but the organic prices speak the ecological truth.

Organic foods reflect the 'real' price

When evaluating the different price levels of conventional and organic food, the so-called 'external costs' should always be taken into account. These are caused by the negative effects of harmful agricultural practices on the environment, climate or health. For example, the consequential costs of nitrate and pesticide pollution of bodies of water and drinking water are passed on to taxpayers and water customers - the supposedly cheap products would be significantly more expensive if the external costs had to be factored in and the prices thus spoke the truth [1].

Organic farms operate in an environmentally, climate-friendly and animal-friendly manner, with almost no negative external effects. In addition, organic farms provide positive services, e.g. B. the organic farmers strengthen biodiversity [2; 3] and bind harmful greenhouse gases in their humus soils. If one evaluates organically produced production in terms of money, the difference in the producer price is significantly lower, in the case of pork it is roughly halved [4]. If the environmental costs had to be borne by those who caused them, i.e. those who pollute groundwater or damage the soil, then the price gap between organic and conventional would be smaller.

Organic farming is more labor intensive

The additional price of organic products compared to the average of conventional products is, among other things. due to the fact that higher production costs result from more labor-intensive processes and the requirements of animal-friendly and environmentally friendly animal husbandry. At the same time, the yields per hectare of land or z. B. the milk yield per cow, lower - especially since part of the area is not used to grow crops for sale, but legumes are grown for nitrogen production so that the soil remains fertile and the plants can be fed ecologically. In addition, organic crop production and organic animal husbandry usually require a higher level of specialist know-how than in conventional agriculture [5; 6] and more workers.

Eco-processing is more demanding

In the organic food industry, only a small proportion of the additives used in conventional food processing is allowed and gentle processes are used [6]. The processing into high-quality organic products therefore requires a high level of craftsmanship - and is both time-consuming and cost-intensive. In the rather small-scale organic processing sector and with relatively low processing quantities, the unit costs per unit are higher than in industrial production.

Organic trade is more fragmented and implements smaller quantities

Around a third of all organic products are sold in health food stores and health food stores [7]. Compared to normal food retailers, these shops are characterized by their 100% organic range and offer customers intensive service and advice. In addition, delivering to small specialist shops is associated with additional costs. These factors make themselves felt in the price. Since the turnover of organic food is still comparatively low overall, the logistics and sales costs of the products are higher than for conventional products and therefore require surcharges [8].

Eco products are strictly controlled

The price of organic products also includes the costs for checking compliance with the special quality guidelines and cultivation and processing regulations. Organic food is checked on its way from the field to the store shelf for compliance with the guidelines of the EU organic regulation and, if applicable, the organic associations. In order to ensure that ecologically labeled food cannot be confused with conventional products, unpackaged domestic and imported organic products are stored, processed and transported separately from conventional products [6].

Falling prices and market differentiation

The current developments on the organic market are causing falling prices for organic products. Since sales are increasing through sales in discounters and the increasing number of organic supermarkets, costs can be saved, especially in retail. At the same time, this development also leads to a differentiation in quality and price for organic food. Nonetheless, customers will have to dig deeper into their pockets for eco products at the checkout, as long as there are no statutory rules according to which those who cause environmental or climate pollution have to pay the costs of environmental or climate pollution, the costs are included in the products and the Prices speak the truth. However, higher generation, processing and control costs will continue to have to be paid. Because quality has its price, especially when it comes to food!


Swell:

[1] Waibel, H. and Fleischer, G. (1998): Costs and benefits of chemical plant protection in German agriculture from a macroeconomic perspective. Wissenschaftsverlag Vauk Verlag KG, Kiel.

[2] Köpke, U. (2002): Environmental performance of organic farming. In: Ökologie und Landbau 122, 2/2002, pp. 6-18.

[3] Dabbert, S., Häring, A. M. and Zanoli, R. (2002): Politics for organic farming. Ulmer Verlag, Stuttgart.

[4] Korbun, T. et al. (2004): What does a schnitzel really cost? Ecological-economic comparison of the conventional production of pork in Germany. IÖW series of publications, 171/04, Berlin.

[5] Neuerburg, W. and Padel, S. (1992): Organic-biological farming in practice. BLV Verlagsgesellschaft mbH, Munich.

[6] EG-Öko-Basicverordnung (EG) No. 834/2007 and resale right.

[7] AMI (2010): Ökomarkt-Service. Edition 08/2010 of February 25, 2010.

[8] Goessler, R. (Ed.) (2004): Structures of the demand for organic food in Germany. Volume 53, ZMP - Zentrale Markt- und Preisberichtstelle GmbH, Bonn.