Certified organic food. Certified organic products are generally more expensive than their conventional counterparts (for which prices have been declining) for a number of reasons:
Post-harvest handling of relatively small quantities of organic foods results in higher costs because of the mandatory segregation of organic and conventional produce, especially for processing and transportation; Marketing and the distribution chain for organic products is relatively inefficient and costs are higher because of relatively small volumes. As demand for organic food and products is increasing, technological innovations and economies of scale should reduce costs of production, processing, distribution and marketing for organic produce. Prices of organic foods include not only the cost of the food production itself, but also a range of other factors that are not captured in the price of conventional food, such as: Environmental enhancement and protection (and avoidance of future expenses to mitigate pollution).
For example, higher prices of organic cash crops compensate for low financial returns of rotational periods which are necessary to build soil fertility; Rural development by generating additional farm employment and assuring a fair and sufficient income to producers. Non-certified organic food. In many developing countries, there are agricultural systems that fully meet the requirements of organic agriculture but which are not certified. Non-certified organic agriculture refers to organic agricultural practices by intent and not by default; this excludes non-sustainable systems which do not use synthetic inputs but which degrade soils due to lack of soil building practices. It is difficult to quantify the extent of these agricultural systems as they exist outside the certification and formal market systems. The produce of these systems is usually consumed by households or sold locally (e. g. urban and village markets) at the same price as their conventional counterparts.
Although the uncertified produce does not benefit from price premiums, some cases have been documented where non-certified organic agriculture increases productivity of the total farm agro-ecosystem, and saves on purchasing external inputs. In developed countries, non-certified organic food is often sold directly to consumers through local community support programmes such as box schemes, farmers markets and at the farm gate. These allow the producer to know exactly what the consumer wants, while the consumer knows where the produce comes from and in the case of box schemes, saves on transport costs through delivery of produce to their homes. In developed countries, non-certified organic produce usually carries a higher price than its conventional counterpart, in accordance with the specific consumer willingness to pay.
Food prices reflect the costs of growing, harvesting, transportation, storage, processing and packaging. To be certified organic food must meet stricter regulations that govern all these steps in the process. Organic food production is usually more labour and management intensive and happens on a smaller scale ie on smaller farms which lack the benefit of economy of scale. All this makes organic food more expensive than conventionally farmed food. But this is only if we don t look at the true cost of food production. When the indirect costs of conventional food production such as replacement of eroded soils, clean up of polluted water, costs of health care for farmers, farm workers and the consumers, environmental cost of artificial pesticide production and disposal, are factored into the cost, organic food is much cheaper. We need to look at the full lifecycle cost of production of organic vs non-organic.
Organic food is more labour intensive,В protecting the environment Organic farming methods means production yields are often, but not always, lower than those obtained by conventional farming methods. This is because organic food production does not involve the use of artificial fertilisers, pesticides and other technological aids. Depending where in Australia you purchase organic produce you can expect to pay at least a 20 percent premium. A 2000 survey by Choice Magazine found organic fruit and vegetables were on average 70 percent more expensive than non-organic but the gap was shrinking. One factor driving the prices down is the entry into the organic market of the big players such as Coles and Woolworths. In countries where organic production is a higher proportion of the overall food production than it is in Australia, the price of organic food is coming down. This is largely due to economies of scale.