Organic farmers need to borrow less money than conventional farmers for two reasons. First, organic farmers buy fewer inputs, such as fertilizers and pesticides. Second, costs and revenues are more evenly distributed throughout the year on diversified organic farms. For example, profits from the July wheat harvest can buy fuel for the corn harvest, reducing the need to borrow for the corn harvest.
Organic farmers have complained that lenders discriminate against them by lenders, a possible economic disadvantage of organic agriculture. However, Blobaum (198) concluded that this problem is more perceived than real. As far as possible, organic agriculture systems are based on crop rotation, crop residues, animal manures, legumes, green manures, non-agricultural organic waste, mechanical cultivation, mineral-containing rocks, and some aspects of biological pest control to maintain soil and tillage productivity, supply nutrients to plants and control insects, weeds and other pests. Therefore, the economic benefits for farmers of an incremental investment in organic research may be greater than those of a corresponding investment in chemical-oriented research.
The critical points of organic production and its benefits to local economies, and give real examples of how successful investment in organic agriculture creates jobs and business opportunities at the local level and increases the economic possibilities available in a locality. Wichner calls this a “virtuous circle”: using sustainable agricultural practices to convert farmland to organic allows farmers to expand and sell higher-value crops; this increases their incomes and allows them to spend more money in their local communities, stimulates the economy and, at the same time, supports the conversion of more land to organic land. The organic industry illustrates the positive economic impact of agriculture and organic products, and the importance of consumer choice in the market. Although uncertified products do not benefit from price premiums, there have been some documented cases in which uncertified organic agriculture increases the productivity of the total agricultural agroecosystem and saves on the purchase of external inputs.
Uncertified organic agriculture refers to organic farming practices intentionally and not by default; this excludes unsustainable systems that do not use synthetic inputs but that degrade soils due to the lack of soil construction practices. OTA is the leading voice of organic commerce in the United States and represents more than 9,500 organic companies in 50 states. Many farmers are turning to organic or low-input agriculture as a strategy for economic survival. Several comparisons with real cereal farms in the central and northern states showed that organic agriculture equals or exceeds conventional agriculture in terms of economic performance.
The significant and lasting economic benefits that organic agriculture can offer to local communities are contained in an important new publication published on Thursday by the Federal Reserve Bank of St. Part of that competitive advantage comes from the higher price—driven by consumer demand—that organic farmers can get for their products (although even when profits are adjusted to 50 percent of the current organic premium, most studies continue to show that organic agriculture is gaining ground). Organic agriculture substantially benefits society by reducing pollution and flooding; conserving energy, soil, nutrients, fish, and wildlife; reducing federal costs of supporting grain prices; and ensuring food supplies for future generations. The Organic Trade Association (OTA) is the member-based business association for agriculture and organic products in North America.