Economic Performance of Long-Term Organic and Conventional Cropping Systems in Minnesota

Published in Agron. J. 103:1372–1382 (2011) Posted online 14 Jul 2011 doi:10.2134/agronj2011.0371 Copyright © 2011 by the American Society of Agronomy, 5585 Guilford Road, Madison, WI 53711. All rights reserved. No part of this periodical may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without permission in writing from the publisher. M for organic crops in the United States have developed substantially since the 1990s. Driven by growing consumer demand, retail sales of certified organic foods increased from $3.6 billion in 1997 to $21.1 billion in 2008 (Dimitri and Oberholtzer, 2009). Though much of this growth has been from sales of organic vegetables, sales of organic meat, dairy, and eggs have also increased rapidly. While early adopting organic farmers often had difficulty marketing their crops, there has been an increase in reports of shortages of organic products in recent years (Dimitri and Oberholtzer, 2009). This high consumer demand continues to support substantial price premiums available to growers of organic feed grains. Supply of organic foods has also grown substantially over this time period. Certified organic farmland in the United States increased from 380,000 ha in 1992 to nearly 2,000,000 ha in 2008 (USDA-Economic Research Service, 2010). From 1997 to 2008, organic corn acreage has increased nearly 500% while organic soybean acreage has increased more than 150%. Despite these developments in the organic sector, certified organic cropland still makes up only a small proportion of total U.S. cropland. In 2008, only about 0.7% of U.S. cropland was certified organic (USDA-Economic Research Service, 2010). Several previous studies have analyzed the comparative profitability of organic and conventional cropping systems in the midwestern United States. In Iowa, researchers analyzed 3 yr of data from an experimental trial and found that an organic corn–soybean–oat/alfalfa–alfalfa rotation significantly outperformed a conventional corn–soybean rotation when organic price premiums were considered (Delate et al., 2003). However, when organic price premiums were excluded, the organic rotation returned substantially less than the conventional corn–soybean rotation. A recent study based on long-term trial data in Wisconsin found that when government programs and organic premiums were considered, an organic grain rotation outperformed conventional and no-till cropping systems. Furthermore, when measures of risk exposure were taken into account, the results were largely unchanged (Chavas et al., 2009). In Minnesota, based on 10 yr of trial data from an experiment similar to that reported in this paper, lower production costs in the organic treatment resulted in competitiveness with the conventional system, even when no organic premiums were considered (Mahoney et al., 2004). Earlier studies also show that price premiums are not always necessary for organic systems to be competitive with conventional systems (Welsh, 1999). Variation in crop yields, production costs, and commodity prices introduce risk into crop production systems. The variability of net returns to farm operations that result from fluctuating yields, costs, and prices is an important factor for strategic management decisions. However, while the results of previous studies almost universally show that organic production is economically competitive with conventional methods, the data on which these results are based are often from trials that are either short in duration or small in field size, thereby potentially failing to capture the full variability in crop yields. ABSTRACT