Friday, July 1, 2011

Peak Organic

I was reading farmnwife's blog(@farmnwife on Twitter) and left a lengthy comment, as I tend to do at times.  I decided to post most of that comment since it was something I haven't really talked about here in any great detail.  No big drawn out intro, so if you're confused, leave a comment on here or find me on Twitter @samvance...

There is an economic tipping point that is in organic's future which will doom it, that I never hear anyone mention.  Basically, organic food started out costing about 75% more than conventional and as it became more popular, the prices dropped to about 40-50% more.  As more people use organic, the price will continue to drop until the price equals that of conventional foods.  Normally, this is where a business can finally start to compete and dominate the market, but we have to remember that organic is a more labor intensive choice to create a premium product.  Meaning that farmers really only grow it because it's more profitable. At the point where it costs more for the farmer to grow than conventional(meaning that they see less profit than conventional), they will stop growing organic and switch back to conventional.

This is the reason American beverage bottlers use HFCS primarily and Mexican beverage bottlers use cane sugar... not because of a difference on philosophy, but because HFCS is cheaper than cane sugar in this country due to some trade restrictions we put on Brazilian sugar.  Mexico doesn't have such restrictions, and thus, has cheaper sugar.

I'm not pro or anti-HFCS, I'm just using that as an analogy to explain what will eventually happen to organic food.


  1. Once it drops to that point and the supply drops off, the price should then increase again keeping it at a certain "premium" over conventional foods.

  2. Typically, yes, but you have to remember that many farmers switched there operations to organic, which takes several years, to get the premium money. That premium comes from a reduced yield as well as more labor required to harvest the crop.

    What may happen is that major retailers like Whole Foods will start to subsidize the products to keep them going.

  3. You seem to fail at looking why the prices could be going down.
    It is possible that as more agriculture converts to organic that there is more in the R&D side that improve yield.
    Even more likely is that as petroleum products (like synthetic fertilizers) go up in price, so does conventional agriculture. So as the world runs out of oil and natural gas the price of conventional will go up while organic will remain the same. This does not mean that the return on investment is going down for organic as your blog post would suggest.

  4. That makes no sense... What would they be Researching & Developing? Test crops are done in real time and only sped up through greenhouse or hydroponic methods. They're certainly not looking at biotech solutions or testing new what organic breakthroughs would there be? The organic movement is a rejection of science and emerging technologies. Other than developing novel combination's of beneficial parasite/host plants & insects, organic has nothing to add.


Put your comment here, kind sir/madame. Try to cite sources when stating facts and refrain from off topic comments or hateful/nasty rhetoric.