Is organic farming risky? Well of course, all farming is risky. But, is organic agriculture somehow inherently more risky than other systems of production? Here I will try to use my best rhetoric to answer this simple question. And, please note that simple questions are often the most difficult to answer well.
The short answer is that organic agriculture may be no more revenue risky than non-organic agriculture. This result challenges a widespread stereotype about organic farming. “Revenue risk” here means the risks farmers face due to changes in market price and yields as well as the interaction of those two factors.
The National Center for Appropriate Technology (NCAT) has just released a report on a five-year research and education project funded by the U.S. Department of Agriculture’s (USDA) National Institute of Food and Agriculture (NIFA). I was a co-author of the report, along with Dr. Mike Morris of NCAT and Dr. Eric Belasco of Montana State University.
There is always a backdrop to research, and here’s my story: I have been working for 14 years now to try to figure out whether federally subsidized crop insurance promotes a more sustainable agriculture. A long, long time ago, I read about two obscure types of insurance called Adjusted Gross Revenue and Adjusted Gross Revenue Lite. What caught my attention was that these policies protected the whole farm’s revenue rather than any specific crop. Through the hard work of the National Sustainable Agriculture Coalition (NSAC) and many NSAC members, these policies became the Whole-Farm Revenue Protection (WFRP) policy: created in the 2014 Farm Bill, rolled out in 2015, and still being improved – most recently via congressional suggestions in the 2018 Farm Bill.
From the beginning of this journey, I thought insuring whole farm revenue was a very common sense approach, since what do farmers really want? Most of them want to keep farming. Easing the burden of the often-volatile price and yield risk across the whole farm would help farmers continue to farm.
Also, WFRP causes less market distortion than what happens when we subsidize insurance for individual commodity crops like corn or cotton. This addresses one of the main criticisms of the federal crop insurance system: that it picks winners and losers. WFRP is neutral: it does not incentivize one crop over another. Instead, the farmer chooses crop and livestock products they think will maximize their revenue and we, the public, help them maintain that revenue. WFRP premiums also decrease as the diversity of crops and livestock products increases. Common sense and tons of research tell us that that diversification reduces risk, meaning fewer crop insurance payments and lower taxpayer expense.
Since organic systems tend to be diversified, the diversity aspect of WFRP is often a plus for them. Organic farms are also automatically insured under WFRP for the typically higher value of their products, because these higher organic prices are reflected in the farm’s revenue history. So, we have a type of insurance that incentivizes organic and sustainable diverse systems of production and lowers public expense. Sound like a good idea to you? It does to me.
What does any of this have to do with organic farming risk and our report? Well, it turns out that comparing organic and non-organic farms using WFRP provides a window into the overall risk of these farms, enabling us to investigate those harmful negative stereotypes that have caused so much grief for organic farming and motivated our research.
One of the factors that raise the environmental cost of organic product is that more land must be used to generate the same volume of food, due to the reduced use of fertilizers. This need to devote greater acreage to agricultural production leads to deforestation, which reduces the storage capacity of carbon in soils.
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Answer:
Is organic farming risky? Well of course, all farming is risky. But, is organic agriculture somehow inherently more risky than other systems of production? Here I will try to use my best rhetoric to answer this simple question. And, please note that simple questions are often the most difficult to answer well.
The short answer is that organic agriculture may be no more revenue risky than non-organic agriculture. This result challenges a widespread stereotype about organic farming. “Revenue risk” here means the risks farmers face due to changes in market price and yields as well as the interaction of those two factors.
The National Center for Appropriate Technology (NCAT) has just released a report on a five-year research and education project funded by the U.S. Department of Agriculture’s (USDA) National Institute of Food and Agriculture (NIFA). I was a co-author of the report, along with Dr. Mike Morris of NCAT and Dr. Eric Belasco of Montana State University.
There is always a backdrop to research, and here’s my story: I have been working for 14 years now to try to figure out whether federally subsidized crop insurance promotes a more sustainable agriculture. A long, long time ago, I read about two obscure types of insurance called Adjusted Gross Revenue and Adjusted Gross Revenue Lite. What caught my attention was that these policies protected the whole farm’s revenue rather than any specific crop. Through the hard work of the National Sustainable Agriculture Coalition (NSAC) and many NSAC members, these policies became the Whole-Farm Revenue Protection (WFRP) policy: created in the 2014 Farm Bill, rolled out in 2015, and still being improved – most recently via congressional suggestions in the 2018 Farm Bill.
From the beginning of this journey, I thought insuring whole farm revenue was a very common sense approach, since what do farmers really want? Most of them want to keep farming. Easing the burden of the often-volatile price and yield risk across the whole farm would help farmers continue to farm.
Also, WFRP causes less market distortion than what happens when we subsidize insurance for individual commodity crops like corn or cotton. This addresses one of the main criticisms of the federal crop insurance system: that it picks winners and losers. WFRP is neutral: it does not incentivize one crop over another. Instead, the farmer chooses crop and livestock products they think will maximize their revenue and we, the public, help them maintain that revenue. WFRP premiums also decrease as the diversity of crops and livestock products increases. Common sense and tons of research tell us that that diversification reduces risk, meaning fewer crop insurance payments and lower taxpayer expense.
Since organic systems tend to be diversified, the diversity aspect of WFRP is often a plus for them. Organic farms are also automatically insured under WFRP for the typically higher value of their products, because these higher organic prices are reflected in the farm’s revenue history. So, we have a type of insurance that incentivizes organic and sustainable diverse systems of production and lowers public expense. Sound like a good idea to you? It does to me.
What does any of this have to do with organic farming risk and our report? Well, it turns out that comparing organic and non-organic farms using WFRP provides a window into the overall risk of these farms, enabling us to investigate those harmful negative stereotypes that have caused so much grief for organic farming and motivated our research.
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Answer:
One of the factors that raise the environmental cost of organic product is that more land must be used to generate the same volume of food, due to the reduced use of fertilizers. This need to devote greater acreage to agricultural production leads to deforestation, which reduces the storage capacity of carbon in soils.
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