IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v9y2021i2p64-d543332.html
   My bibliography  Save this article

Comparative Economics of Conventional, Organic, and Alternative Agricultural Production Systems

Author

Listed:
  • Timothy C. Durham

    (Agriculture and Biology Programs, School of Arts and Sciences, Ferrum College, Ferrum, VA 24088, USA)

  • Tamás Mizik

    (Department of Agribusiness, Corvinus University of Budapest, 1093 Budapest, Hungary)

Abstract

Agricultural production systems are a composite of philosophy, adoptability, and careful analysis of risks and rewards. The two dominant typologies include conventional and organics, while biotechnology (GM) and Integrated Pest Management (IPM) represent situational modifiers. We conducted a systematic review to weigh the economic merits—as well as intangibles through an economic lens—of each standalone system and system plus modifier, where applicable. Overall, 17,485 articles were found between ScienceDirect and Google Scholar, with 213 initially screened based on putative relevance. Of those, 82 were selected for an in-depth analysis, with 63 ultimately used. Economically, organic generally outperformed conventional systems. This is largely due to their lower production costs and higher market price. However, organic farms face lower yields, especially in the fruit, vegetable, and animal husbandry sectors. With that said, organic farming can provide significant local environmental benefits. Integrated pest management (IPM) is a potentiator of either core system. As a risk reduction and decision-making framework, it is labor intensive. However, this can be offset by input reductions without yield penalty compared to a conventional baseline. Biotechnology is a rapidly emerging production system, notably in developing countries. The use of GM crops results in lower production cost and higher yields. As a conventional modifier, its major advantage is scale-neutrality. Thus, smaller and lower income farmers may achieve higher gross margin. The main source of environmental benefits is reduced pesticide use, which implies a decreased need for fuel and labor. Barring external influences such as subsidies and participation in prescriptive labeling programs, farmers should focus on an a la carte approach (as opposed to discrete system adoption) to optimize their respective enterprises.

Suggested Citation

  • Timothy C. Durham & Tamás Mizik, 2021. "Comparative Economics of Conventional, Organic, and Alternative Agricultural Production Systems," Economies, MDPI, vol. 9(2), pages 1-22, April.
  • Handle: RePEc:gam:jecomi:v:9:y:2021:i:2:p:64-:d:543332
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/9/2/64/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/2227-7099/9/2/64/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Raluca Dragusanu & Daniele Giovannucci & Nathan Nunn, 2014. "The Economics of Fair Trade," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 217-236, Summer.
    2. Mayen Carlos D & Balagtas Joseph V. & Alexander Corinne E., 2009. "Vertical Economies of Scope in Dairy Farming," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(1), pages 1-17, October.
    3. Barham, Bradford L. & Weber, Jeremy G., 2012. "The Economic Sustainability of Certified Coffee: Recent Evidence from Mexico and Peru," World Development, Elsevier, vol. 40(6), pages 1269-1279.
    4. Greene, Catherine & Wechsler, Seth J. & Adalja, Aaron & Hanson, James, 2016. "Economic Issues in the Coexistence of Organic, Genetically Engineered (GE), and Non-GE Crops," Economic Information Bulletin 232929, United States Department of Agriculture, Economic Research Service.
    5. Jeffrey Gillespie & Richard Nehring, 2013. "Comparing economic performance of organic and conventional U.S. beef farms using matching samples," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(2), pages 178-192, April.
    6. Gerling, Charlotte & Sturm, Astrid & Wätzold, Frank, 2019. "Ecological-economic modelling to compare the impact of organic and conventional farming on endangered grassland bird and butterfly species," Agricultural Systems, Elsevier, vol. 173(C), pages 424-434.
    7. Matin Qaim, 2009. "The Economics of Genetically Modified Crops," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 665-694, September.
    8. Georgina Catacora-Vargas & Rosa Binimelis & Anne I. Myhr & Brian Wynne, 2018. "Socio-economic research on genetically modified crops: a study of the literature," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 35(2), pages 489-513, June.
    9. Maria Travisi, Chiara & Nijkamp, Peter & Vindigni, Gabriella, 2006. "Pesticide risk valuation in empirical economics: a comparative approach," Ecological Economics, Elsevier, vol. 56(4), pages 455-474, April.
    10. Bolwig, Simon & Gibbon, Peter & Jones, Sam, 2009. "The Economics of Smallholder Organic Contract Farming in Tropical Africa," World Development, Elsevier, vol. 37(6), pages 1094-1104, June.
    11. Wani, Suhas P. & Anantha, K.H. & Garg, Kaushal K., 2017. "Soil Properties, Crop Yield, and Economics Under Integrated Crop Management Practices in Karnataka, Southern India," World Development, Elsevier, vol. 93(C), pages 43-61.
    12. Carlos D. Mayen & Joseph V. Balagtas & Corinne E. Alexander, 2010. "Technology Adoption and Technical Efficiency: Organic and Conventional Dairy Farms in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 181-195.
    13. Hernandez-Aguilera, J. Nicolas & Conrad, Jon M. & Gómez, Miguel I. & Rodewald, Amanda D., 2019. "The Economics and Ecology of Shade-grown Coffee: A Model to Incentivize Shade and Bird Conservation," Ecological Economics, Elsevier, vol. 159(C), pages 110-121.
    14. Szvetlana Acs & Paul Berentsen & Ruud Huirne & Marcel van Asseldonk, 2009. "Effect of yield and price risk on conversion from conventional to organic farming ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), pages 393-411, July.
    15. Sexton, Steven E. & Lei, Zhen & Zilberman, David, 2007. "The Economics of Pesticides and Pest Control," International Review of Environmental and Resource Economics, now publishers, vol. 1(3), pages 271-326, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ibanez, Marcela & Blackman, Allen, 2016. "Is Eco-Certification a Win–Win for Developing Country Agriculture? Organic Coffee Certification in Colombia," World Development, Elsevier, vol. 82(C), pages 14-27.
    2. Jaime Martín-García & José A. Gómez-Limón & Manuel Arriaza, 2023. "Conventional versus organic olive farming: which has a better economic performance?," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 11(1), pages 1-27, December.
    3. Dietz, Thomas & Auffenberg, Jennie & Estrella Chong, Andrea & Grabs, Janina & Kilian, Bernard, 2018. "The Voluntary Coffee Standard Index (VOCSI). Developing a Composite Index to Assess and Compare the Strength of Mainstream Voluntary Sustainability Standards in the Global Coffee Industry," Ecological Economics, Elsevier, vol. 150(C), pages 72-87.
    4. Nguyen Khanh Doanh & Nguyen Thi Thu Thuong & Yoon Heo, 2018. "Impact of Conversion to Organic Tea Cultivation on Household Income in the Mountainous Areas of Northern Vietnam," Sustainability, MDPI, vol. 10(12), pages 1-21, November.
    5. Froehlich, Anderson G. & Melo, Andrea S.S.A. & Sampaio, Breno, 2018. "Comparing the Profitability of Organic and Conventional Production in Family Farming: Empirical Evidence From Brazil," Ecological Economics, Elsevier, vol. 150(C), pages 307-314.
    6. Marie Lassalas & Sabine Duvaleix & Laure Latruffe, 2024. "The technical and economic effects of biodiversity standards on wheat production," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 51(2), pages 275-308.
    7. Kouser, Shahzad & Qaim, Matin, 2012. "Valuing financial, health and environmental benefits of Bt cotton in Pakistan," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126544, International Association of Agricultural Economists.
    8. Abdoul Murekezi & Songqing Jin & Scott Loveridge, 2014. "Have coffee producers benefited from the new domestic cherry market? Evidence using panel data from Rwanda," Agricultural Economics, International Association of Agricultural Economists, vol. 45(4), pages 489-500, July.
    9. Chiputwa, Brian & Spielman, David J. & Qaim, Matin, 2015. "Food Standards, Certification, and Poverty among Coffee Farmers in Uganda," World Development, Elsevier, vol. 66(C), pages 400-412.
    10. Christian Grovermann & Sylvain Quiédeville & Adrian Muller & Florian Leiber & Matthias Stolze & Simon Moakes, 2021. "Does organic certification make economic sense for dairy farmers in Europe?–A latent class counterfactual analysis," Agricultural Economics, International Association of Agricultural Economists, vol. 52(6), pages 1001-1012, November.
    11. Kleemann, Linda & Abdulai, Awudu & Buss, Mareike, 2014. "Certification and Access to Export Markets: Adoption and Return on Investment of Organic-Certified Pineapple Farming in Ghana," World Development, Elsevier, vol. 64(C), pages 79-92.
    12. Ayuya, Oscar I. & Gido, Eric O. & Bett, Hillary K. & Lagat, Job K. & Kahi, Alexander K. & Bauer, Siegfried, 2015. "Effect of Certified Organic Production Systems on Poverty among Smallholder Farmers: Empirical Evidence from Kenya," World Development, Elsevier, vol. 67(C), pages 27-37.
    13. Uematsu, Hiroki & Mishra, Ashok K., 2012. "Organic farmers or conventional farmers: Where's the money?," Ecological Economics, Elsevier, vol. 78(C), pages 55-62.
    14. Ruifeng Liu & Zhifeng Gao & Rodolfo M. Nayga & Lijia Shi & Les Oxley & Hengyun Ma, 2020. "Can “green food” certification achieve both sustainable practices and economic benefits in a transitional economy? The case of kiwifruit growers in Henan Province, China," Agribusiness, John Wiley & Sons, Ltd., vol. 36(4), pages 675-692, October.
    15. Meemken, Eva-Marie & Spielman, David J. & Qaim, Matin, 2017. "Trading off nutrition and education? A panel data analysis of the dissimilar welfare effects of Organic and Fairtrade standards," Food Policy, Elsevier, vol. 71(C), pages 74-85.
    16. Kouser, Shahzad & Qaim, Matin, 2011. "Impact of Bt cotton on pesticide poisoning in smallholder agriculture: A panel data analysis," Ecological Economics, Elsevier, vol. 70(11), pages 2105-2113, September.
    17. AKOYI, Kevin Teopista & MAERTENS, Miet, 2016. "Private Sustainability Standards in the Ugandan Coffee Sector: Empty Promises or Catalysts for Development?," Working Papers 235004, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    18. repec:ags:aaea22:335490 is not listed on IDEAS
    19. Takahashi, Ryo & Todo, Yasuyuki, 2013. "Impact of a Shade Coffee Certification Program on Forest Conservation:A Case Study from a Wild Coffee Forest in Ethiopia," Working Papers 55, JICA Research Institute.
    20. Rebecca Buttinelli & Raffaele Cortignani & Gabriele Dono, 2021. "Financial sustainability in Italian Organic Farms: An analysis of the FADN Sample," Economia agro-alimentare, FrancoAngeli Editore, vol. 23(3), pages 1-32.
    21. Gabriella Vindigni & Iuri Peri & Federica Consentino & Roberta Selvaggi & Daniela Spina, 2022. "Exploring Consumers’ Attitudes towards Food Products Derived by New Plant Breeding Techniques," Sustainability, MDPI, vol. 14(10), pages 1-14, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:9:y:2021:i:2:p:64-:d:543332. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.