Agri News, MN
05-01-07
ISU study finds it pays to have organic agriculture
AMES, Iowa -- Does it pay locally to help farmers convert their operations from
conventional to organic crop production?
Iowa State University economists offer some detailed answers, using as their
model the Woodbury County plan to provide tax abatements for producers who
transition from conventional to organic farming.
The study shows that the potential regional economic impact of organic crop
production exceeds that of conventional crop production.
In work funded by the Leopold Center for Sustainable Agriculture, David
Swenson and Liesl Eathington of the ISU economics department, and Craig
Chase, an ISU Extension farm management field specialist, assess the
potential region-wide economic impact of this major switch in production
practices.
The project, "Determining the methods for measuring the economic and fiscal
impacts associated with organic crop conversion in Iowa," affirms existing ISU
research that demonstrates that farmers who choose organic methods will
receive greater economic returns than those who opt for conventional practices.
Next, the economic impact of that difference was measured considering all
linkages with the regional economy. The study found that the economic impacts
of the organic alternative were substantially larger than the conventional
configuration.
Specifically, organic rotation farming produced 52 percent more gross sales
revenue, 110 percent more value added, and 182 percent more labor income
than from the same 1,000 acres farmed using conventional corn-soybean
rotation practices.
Swenson said that "the organic alternative requires greater mechanical inputs,
more labor and yields a higher return to the operators. All of these factors
combine to yield greater amounts of income-based economic impacts in the
study region."
These outcomes will hold up, he added, even with the recent spike in corn prices
as the spread between organic and conventional crop prices has remained
relatively constant.
The analysis for the effective economic use of property tax abatements as an
incentive for farmers to shift from conventional to organic production isn't as
promising.
The study concludes that over a reasonable period of time, the county is not
likely to recover the forgone property tax revenue used to fund the original
program with sufficient new, economic impact-driven, property tax collections, as
well as fund the county and public school services need.