The Price of Organic Food

Friday, September 05, 2008 by Jeremy Dore - Categories: organic food
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There are certain accepted facts in life: prices go up, people are living longer and organic food is more expensive than non-organic.  Right?  Well, incredible as it may sound, the Soil Association has this week published a study that challenges the last of these assumptions.  According to research done by farm business consultants Andersons, the price of oil is going to dramatically change the profitability of farming systems.

In the last few weeks oil prices have fallen but it’s only a couple of months since they hit nearly $150 a barrel.  The present price seems to be a temporary reprieve: most analysts are predicting that costs will rise significantly in the medium term, with recent report ‘The Coming Oil Supply Crunch’ from Chatham House (the independent research home of the Royal Institute of International Affairs) predicting that they will rise above $200 a barrel in 5 – 10 years.

The price of artificial fertilizers is closely related to oil prices since it takes energy to create the Nitrogen compounds in them and non-organic farming systems are particularly dependent on the use of fossil-fuels.  In contrast, most organic farmers will use green manures to build soil fertility and, whilst they still need diesel for machinery, their costs are generally more stable.  The report found that once oil prices hit $200 many rotations of crops become cheaper to produce by organic methods even allowing for the time the green manures are grown.  (The one exception is when potatoes are included, although the profit margins still become much closer between the two systems.)  To make sure that the figures were realistic, Andersons used crop rotations based on actual farms that they work with, comparing the profit margins between oil costing $135 a barrel and $200 a barrel.

I think that there is another factor to take into consideration as well.  This month newspapers have reported that sales of organic produce have fallen for the first time in a decade – a fact that many are putting down to the ‘credit crunch’ causing consumers to cut their spending on more expensive items.  Whether or not this is just a ‘blip’ in the figures, it is high time that supermarkets stopped over-charging for organic produce (reducing all the unnecessary extra packaging would be a great start) and the credit crunch should help with that as supply and demand kicks in.  Rising oil prices should also discourage the ridiculous practice of air-freighting produce in from thousands of miles away.

Of course, the very cheapest way to source organic food is to grow it yourself and that’s an area that’s booming.  According to a survey by the chain of DIY stores B&Q, over two thirds of British homeowners say that they will be growing their own fruit and vegetables in the next 12 months.  Apparently a vegetable patch is now the most envied feature of a neighbour’s garden!  So, whilst food costs in general have been rising at an alarming rate, the extra margin on organic food looks set to decrease.  Wouldn’t it be great if larger shops were bold enough to just source their produce from local organic farms when they’re in season?  Organic vegetable box schemes are good but a lot of consumers still aren’t aware of them or want to buy vegetables more selectively.  I’d like to see cheap organic vegetables go mainstream.  Perhaps the economies of organic food production will finally bring that about.