The Profitability of Organic Soybean Production
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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- 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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