NRR - if more people ate organic, would prices go down due to economies of scale?

Having worked in the food industry, a major issue with "organic" agriculture is that yields are far lower on organic farms than on non-organic farms. You just can't grow as high a volume of food using organic practices as you can without them.

So to answer the question, no. Organic food costs more because it takes more resources to grow them. Producing more of it doesn't change that.

industry perspective wrote:

Having worked in the food industry, a major issue with "organic" agriculture is that yields are far lower on organic farms than on non-organic farms. You just can't grow as high a volume of food using organic practices as you can without them.

So to answer the question, no. Organic food costs more because it takes more resources to grow them. Producing more of it doesn't change that.

So you don't believe there are ANY economies of scale that can be realized in that industry? Transportation? Marketing? Mechanized harvesting?

I agree that those economies could be overshadowed by increased demand and the price could increase.

There are a number of responses with useful insights and there are a number that are polemic. Here are some considerations as to the economics.

1 There are economies of scale to some extent in a variety of elements, ranging from information on how to do this type of farming to how to market it.

2 Maybe more important than the economies in production (more later) are the economies in distribution. If you look at Trader Joes you will see that they have addressed some of these issues and found ways to get significant economies in providing moderately price organic goods.

There are complex issues having to do with distribution channels and costs that I will not go into but I will note that the economies in this part of the business are a key reason for a number of mergers and acquisitions in a large number of different industries.

The distribution process is complex and has a number of aspects to it. It is well known that canned goods are easier to provide than fresh goods because processing can be done near the point of production, which matters a lot for goods that are perishable, delicate, and/or produced a long way from where consumption takes place. There are lessons here for understanding the economics of organic foods. Organic foods are not always developed to be 'durable' (think tomatoes and how they have been altered over time) and thus costs are higher for a number of reasons (not addressing the difference in the food itself, such as the flavor and nutrition because that is part of the valuation that people bring and I cannot add insights to others here on this side of the ledger other than to note that we do not have an 'apples to apples' comparison of prices even when organic and 'standard' apples are being compared).

3. The 'validation' process adds cost to organic food.

4. The choice of shopping venue is not independent of the choice of food 'type' (organic and standard), and thus the cost of organic is higher because of a related factor. As organic becomes more 'mainstream' it will be ubiquitous in mass market stores and costs per unit will be lower (both other attributes that some people value will be lacking).

5. There are subsidies in food production in the US but they do not have a huge impact on the costs of food on the grocery shelf, so that is not an important empirical factor when comparing prices. In Europe, subsidies are even more important but do not necessarily result in lower food prices. For instance, one farm policy subsidy is to pay landowners to let land be fallow, reducing the quantity supplied and raising prices.

Transportation costs of produce etc are not as large a factor as they used to be. For instance, when I go back to California where I grew up I observe the prices of grocery products. I have noted that most produce is more expensive there than in Wisconsin, although this is partly due to the particular store where I shop most.

Enough for now.

No, prices would remain the same, or go up. Let's be honest - if the companies can sell X product at Y price to a small group, what incentive is there to lower that price if, apropos nothing, even more people start buying it?

The production cost (to the companies) would most likely go down due to economy of scale. But there's no reason to expect those companies to then pass the saving on to the consumer in the form of lowered prices.

If people would instead refuse to buy the product unless it is below Z price, or only buy the cheapest option, then the prices would go down.

Even if it did, I think the agrichem industry will create some crop killer forcing farmers to buy their products again. They seem pretty powerful. :puts on tin foil hat:

Economies of scale generally apply to being able to do things more efficiently, but in an agricultural context this would mean Food Inc-esque corporate farms, so it would kind of defeat the purpose of buying organic.

Tangled up in Blue wrote:

Economies of scale generally apply to being able to do things more efficiently, but in an agricultural context this would mean Food Inc-esque corporate farms, so it would kind of defeat the purpose of buying organic.

Efficiency could be quantified by dollars generated per acre. I recently watched a film (can't remember which one) where a small scale organic farmer said he made around $16000 per acre. A large commercial grain farm with government subsidies makes about $20 an acre.

Someone needs to do a really convincing study that eating organic is actaully better for you than eating the same thing grown non-organically before i cough up the cash for this.

I like the idea of eating foods grown close to home but so what if they have chemicals on them. I've been eating this way my whole life!

It's not like i'm going to run faster eating organic and i've got nothing else health-wise that i want to improve.

I doubt you'll find a conclusive study of organic vs non-organic (especially given the power of the food lobby), but common sense should tell you that consuming chemical fertilizers, herbicides and pesticides is not good for you. When buying organic, some foods are better than others because of the plant's ability to uptake and retain chemicals or simply because they require harsher chemicals. There are lists out there that recommend foods that should be organic and which ones don't really matter (for example, I never buy organic bananas).

Yes, you have been eating this way your whole life, but you're also behind a generation of very unhealthy people with high rates of cancer, diabetes, and obesity. Is that the example you want to follow?

Foods grown with chemical fertilizers often lack micro-nutrients that are found in organic and naturally grown foods. Chemical fertilizers focus on N-P-K ratios to make the plant grow big and fast, but they usually leave out the micro-nutrients. It might not make you run faster, but eating organic might supply a necessary mineral that you are currently deficient.

Chyeah man ATC wrote:

NRR - if more people ate organic, would prices go down due to economies of scale?

I don't know about pricing, but what I do know is that if everyone ate tons of organic green vegetables everyday, there would be a lot of fibrous greenish POO everywhere.

Common sense is wrong a good chunk of the time. And it also differs between reasonable people.And even when something is bad for you, you need to know how bad. If it cuts my life expectancy from 72.1 to 72, I don't really care. Other choices I have made (living in a city versus country) have probably taken more years off than that.As far the unhealthy people thing, linking that to organic food versus nonorganic is very tenuous at best. Yes corporate farming allowed lower food prices which enables obesity. But the rich person buying 5lbs of organic cheese is going to get just as fat as the poor person buying 5lbs of conventional cheese. The problem is not organic/inorganic. It is the eating of 5lbs of cheese.

industry perspective wrote:

Having worked in the food industry, a major issue with "organic" agriculture is that yields are far lower on organic farms than on non-organic farms. You just can't grow as high a volume of food using organic practices as you can without them.

When you grow organic food in rows, with chemicals and machines, the way you've been taught, then you'll get the results you've been taught to get.

However, yields for organic food grown intensively throughout history has been much higher than conventional gmo crops grown in rows, with chemicals and machines.

Chemical crops are land hogs.

Organic crops flourish in small spaces.

Look at the cost of mixed greens. It is a product that fits will into the organic market place and it about the same cost at the store as 'conventional' greens.

Organic is a brand, and anyone who buys organic from a store is a fool.

To compare a grain farm to an organic vegetable farm is just plain stupid.

Organic food is no safer for you in any degree. The truth is that labeled chemical inputs to control pests have under gone years of tests to determine food safety.

Organic does not mean chemical free.

Based on where you live, organic production could be much easier that where someone else live so for you to have the least impact on the environment, since we have already decided that this is why you by organic, you may have to purchase things from a local conventional source to save the environment.

Since you are all so concerned:

http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5060370&acct=nopgeninfo

mlj wrote:

Yes, you have been eating this way your whole life, but you're also behind a generation of very unhealthy people with high rates of cancer, diabetes, and obesity. Is that the example you want to follow?

How can you think that not eating organic has caused obesity, cancer, and diabetes?

Obesity - too many calories of any kind in and not enough calories of any kind out

Diabetes - fat, liver, and muscle cells do not respond normally to insulin. As a result blood sugar does not get into cells to be stored for energy and blood sugar is abnormally high which makes things rot. Type 2 is a common side effect of obesity

Cancer - a disease of unknown origin but there is absolutely nothing that links inorganic food to cancer.

if i were deficient in a nutrient due to eating chemicals, i'd be sick. i'm not.

little speaker wrote:

How can you think that not eating organic has caused obesity, cancer, and diabetes?

little speaker has a little mind. I never said those 3 are caused by not eating organic. I was simply pointing out that arguments such as "I've been eating this way my whole life!" hold little value given the current state of health in our country. As you said yourself, cancer is a disease of unknown origin. It shouldn't be too far fetched to believe that our bodies are affected by the what we put into them. Plus, you could very well be deficient in some nutrient without even knowing it. As I've stated before, you won't find conclusive studies that prove organic is better than non-organic, but common sense will tell you that one is better for your body and the environment.

If they are seen as normal goods then price will decrease. If seen as luxury goods prices will stay the same and may even increase. Long story short if more people buy then production costs decrease but it is unclear what price the manufacturer will charge.

Wow, people are really dumb. Economies of scale? Hello? McFly. Corporate, Modern, Factory farming (whatever you want to call it)is the result of hundreds of years of perfecting Economies of Scale in the Ag industry. Some of you want to go back to farming the way it was done 100 years ago and you think you're going to make it cheaper?

Answer to the question: Prices would go UP!