economics of organic farming

Michael Perelman michael at
Thu Aug 12 16:51:11 PDT 1999

I have not followed the literature much for a long time, but, yes, this study is in line with what I have seen. The other element is the lower input costs.

Let me respond to Jim Hearfield here also. He says that the price breaks that suppliers give to large farmers represents efficiency. We cannot know such things, since we do no know the actual costs of providing the supplies, but I doubt that he is correct. The lower prices that farmers get for their products would be much more difficult to justify.

I suppose that he could say that the ability of the large farmers to get subsidised water, better access to government (in addition to) private credit and the like all represent a form of efficiency. In that case, financial difficulty is proof of inefficiency -- just as lower wages for blacks and women is proof of their inferiority as workers. I have a problem in believing market outcomes represent some sort of absolute indication of efficiency.

Doug Henwood wrote:

> Apropos recent chatter, there's an interesting review of the
> literature on the economics of organic farming (funded by those busy
> folks at the Pew Charitable Trust) at
> <>. Bottom line seems to be that
> price premiums of some 20-100% for organic foods help, but aren't
> necessary. Not much on labor (except the benefits of nonexposure to
> toxic chemicals), and heavy emphasis on profitability and present
> value calculations, but what else would you expect from a Pew-funded
> study?
> Michael, is this the sort of thing you were referring to when you
> talked about comparative studies of organic & conventional farming?
> Doug

-- Michael Perelman Economics Department California State University Chico, CA 95929

Tel. 530-898-5321 E-Mail michael at

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