Certified organic products are generally more expensive than their conventional counterparts for a number of reasons. As the demand for organics continues to grow, the cost will continue to come down. When the cost is higher, consider these facts:
- Organic farmers don’t receive federal subsidies like conventional farmers do. Therefore, the price of organic food reflects the true cost of growing.
- Organic farming is more labor and management intensive. Greater labor inputs per unit of output and greater diversity of enterprises means economies of scale cannot be achieved.
- Organic farms are usually smaller than conventional farms and so do not benefit from the economies of scale that larger growers get.
- Organic food supply is limited as compared to demand.
- 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 in the future.