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The Profitability of Organic Soybean Production

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  • McBride, William D.
  • Greene, Catherine R.

Abstract

Results from long-term experimental trials suggest that similar yields and lower costs are possible with organic compared to conventional soybeans, but there is little information about the relative costs and returns on commercial farms. This study examines the profitability of commercial soybean production using a nationwide survey of soybean producers for 2006 that includes a targeted sample of organic growers. Treatment-effect models are specified to isolate the impact of choosing the organic approach on various levels of soybean production costs. Organic soybean costs range from about $1 to $6 per bushel higher than those for conventional soybeans due to both lower yields and higher per-acre costs, while the average organic price premium in 2006 is more than $9 per bushel. High returns to organic production are attributed to the significant price premiums paid for organic soybeans in 2006, and these price premiums have remained high in 2007 and 2008. However, much higher conventional soybean prices and increased fuel prices may have reduced the incentive for planting organic soybeans.

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File URL: http://purl.umn.edu/6449
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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida with number 6449.

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Date of creation: 2008
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Handle: RePEc:ags:aaea08:6449

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Keywords: Crop Production/Industries;

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References

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  1. Delate, K. M. & Duffy, Michael & Chase, Craig A. & Holste, A. & Friedrich, H. & Wantate, N, 2003. "An Economic Comparison of Organic and Conventional Grain Crops in a Long-Term Agroecological Research (Ltar) Site in Iowa," Staff General Research Papers 11818, Iowa State University, Department of Economics.
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Cited by:
  1. Chan, Stephanie & Caldwell, Brian & Rickard, Bradley J., 2010. "An Economic Examination of Alternative Organic Cropping Systems in New York State," EB Series 121652, Cornell University, Department of Applied Economics and Management.
  2. Singerman, Ariel & Hart, Chad E. & Lence, Sergio H., 2012. "Revenue Protection for Organic Producers: Too Much or Too Little," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124370, Agricultural and Applied Economics Association.
  3. Gillespie, Jeffrey M. & Nehring, Richard F., 2012. "The Economics of Organic Versus Conventional Cow-calf Production," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119773, Southern Agricultural Economics Association.
  4. McBride, William & Greene, Catherine & Foreman, Linda, 2013. "The Structure and Profitability of Organic Field Corn Production," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149671, Agricultural and Applied Economics Association.
  5. McBride, William D. & Greene, Catherine R. & Ali, Mir B. & Foreman, Linda F., 2012. "The Structure and Profitability of Organic Field Crop Production: The Case of Wheat," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123835, Agricultural and Applied Economics Association.
  6. Laure Latruffe & Céline Nauges, 2010. "Technical efficiency and conversion to organic farming: the case of France," Working Papers SMART - LERECO 10-17, INRA UMR SMART.
  7. Ariel Singerman & Chad E. Hart & Sergio H. Lence, 2011. "Price Analysis, Risk Assessment, and Insurance for Organic Crops," Center for Agricultural and Rural Development (CARD) Publications 11-pb6, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  8. Singerman, Ariel & Lence, Sergio H. & Kimble-Evans, Amanda, 2010. "Organic Crop Prices, or 2x Conventional Ones?," Staff General Research Papers 31544, Iowa State University, Department of Economics.
  9. Peterson, Hikaru Hanawa & Barkley, Andrew P. & Chacon-Cascante, Adriana & Kastens, Terry L., 2012. "The Motivation for Organic Grain Farming in the United States: Profits, Lifestyle, or the Environment?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(02), May.
  10. Funtanilla, Margil & Lyford, Conrad P. & Wang, Chenggang, 2009. "An Evaluation of the Organic Cotton Marketing Opportunity," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49359, Agricultural and Applied Economics Association.
  11. Lohr, Luanne & Park, Timothy A., 2009. "Labor Pains: Valuing Seasonal versus Year-Round Labor on Organic Farms," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(2), August.
  12. Dimitri, Carolyn & Oberholtzer, Lydia & Wittenberger, Michelle, 2010. "The Role of Contracts in the Organic Supply Chain: 2004 and 2007," Economic Information Bulletin 102762, United States Department of Agriculture, Economic Research Service.
  13. Singerman, Ariel & Lence, Sergio H., 2010. "How Closely Related Are The Prices Of Organic And Conventional Corn?," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61151, Agricultural and Applied Economics Association.

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