There is often a misplaced notion that it is the cost of chemicals, the pesticides and the fertilizers that contribute to the cost of food production and doing away with these factors will lower costs. Nothing can be further from the truth. Organic food is grown without these and still on an average costs about 20% to 100% more. Why then this dichotomy?
The cost of any article, product, food stuff or for that matter anything stands largely on three pillars – cost of production, balance in demand and supply and marketing strategies. Each of them can now be studied in detail as separate entities.
Cost of Production
Organic food is free of harsh and toxic chemicals, fertilizers and pesticides and most of the work has to be done by labour. This labour intensive method increases production time and costs. For example, weeds have to be meticulously taken out by hand and removed, in conventional methods they would just be killed off with pesticides. Thus the final product will have this extra labour hire charges included in it making the cost of organic food higher. And especially in Australia, the charges of labour hire in Melbourne for this purpose can be pretty expensive.
Next to labour is the cost of fertilizers which is a significant part of cost of production. Conventional fertilizers and pesticides are not expensive. Further, they are transported in bulk so carriage costs per unit are low. Organic farmers on the other hand use compost and animal manure. Unlike usual fertilisers these are not produced in large volumes and are thus expensive per unit to ship, adding to cost of production.
Keeping the soil healthy between cropping patterns is another area of concern for the organic farmer. While a traditional farmer enhances nitrogen levels with chemical laced fertilizers, an organic farmer has to grow “cover crops” which are not money spinners to enhance richness of the soil. Hence production of organically grown crops is not very cost effective, further adding to overheads.
Demand and Supply
There is a huge gap between demand and supply of healthy organic food. Demand far outstrips supply, further pushing up costs. While more and more health conscious people are opting for chemicals and pesticide free organic foods, the area of cultivation is just a fraction of the total farmlands in cultivation around the world. Statistics are mind boggling. Over 50% of the world’s population are opting for organic foods but the total acreage under cultivation of organically grown crops is less than 1%. So many vying for so less naturally pushes up prices of organic foods.
Conventional agricultural produce has well established marketing chains that are highly cost effective because of the large volumes involved. Organic food on the other hand is low on volume while having the same transportation cost. With higher unit cost for crop movement, organic food will naturally be dearer than normal agricultural production.
These then are the basic reasons why organic food is expensive. There are a lot of other factors too that play an important part in this regard.