How Stuff Works: How organic food prices work

Lots of people have decided to "go organic". They buy organic fruits and vegetables, organic meats and milk, even organic bread and breakfast cereal. If you are moving in an organic direction, here is a common question: Why do organic fruits and vegetables cost more than "normal" fruits and vegetables? An organic plant is one not needing any insecticides, herbicides, fungicides, etc., which cost money. And it is not using any inorganic fertilizers, which also cost money. So ... if you take away these things that cost money, how can the price go up? It seems like a scam.

Many researchers have studied this, and it really is interesting to understand what causes the price increase. It tells you a lot about the differences between organic food production and conventional food production. The University of Wisconsin is one place that has done research, actually growing different crops organically and conventionally and comparing the results. A paper entitled, "Organic potatoes: they can be grown, but can they be profitable?" is enlightening. Let's open the hood and see how organic food gets produced.

What are the costs of organic production? They definitely are higher, and sometimes for unexpected reasons. One of the more interesting is the start up cost. In order for a farm to convert from conventional farming to organic farming, it has to follow organic practices for three years before being certified. Growers have to do this in order to clear the inorganic fertilizers and pesticides from the soil. During these three years, farmers can't get a premium price for producing organic crops because they are not yet certified, but they also can't use any of the chemicals that boost yields. So they have three years of the worst of both worlds. As a farmer, you might just let the land lay fallow for three years, growing alfalfa or something similar, and eat the cost of doing so.

Why alfalfa? Because alfalfa is one of the few plants (clover is another) that fixes nitrogen from the air and deposits it in the soil. Nitrogen is an essential plant nutrient. In conventional farming, the nitrogen usually comes in a bag of fertilizer from a factory. When growing organically, you can't use factory nitrogen. The article points out that an organic potato farmer might grow potatoes one year, alfalfa the next, in a rotation that gives potatoes the nitrogen they need. That rotation increases costs.