Price premiums for organic products depend on the prices of organic and non-organic foods. In some cases, price fluctuations affecting organic food may coincide with those affecting the production of non-organic food; in these cases, the price premium of organic products may not be affected by the underlying price crises. However, since organic and non-organic markets tend to be significantly different from each other, when the price of non-organic products rises, the organic premium may decrease because the selling price of the organic product is not affected. For example, a previous study found that energy and advertising costs affect the prices of non-organic food more than the prices of organic food.
This may be because non-organic agriculture is more dependent on energy-intensive inputs, such as non-organic fertilizers and pesticides. The lower impact of advertising costs on organic food may indicate that companies that sell organic products rely less on advertising and more on the fact that the product is organic when they market their products. On average, organic foods cost 50% more than their conventionally produced counterparts. This is largely because farmers must pay close attention to their cultivation practices.
Pests, weeds, and diseases should be controlled by physical, mechanical and biological controls rather than pesticides. When it comes to meat and dairy products, animals that are not raised organically are often given growth hormones that increase milk production and steroids that help promote growth, resulting in more meat. The increase in meat and milk production means that farmers don't have to charge as much because they have more to sell. Since the USDA began regulating organic food labels in 2002, the organic food sector has been one of the fastest-growing sectors in the food industry.
In addition, the USDA conducts audits and investigations through monitoring and enforcement to ensure that all products labeled as organic comply with USDA organic regulations. In addition, tools such as price data from Colby, MOFGA and Vermont NOFA can help those who cannot afford a fully organic diet plan their meals around the most affordable organic foods (preferably local organic). For example, more and more research shows that organic foods tend to have higher concentrations of nutrients and antioxidants than conventionally grown foods. Their high premiums are likely to reflect high production costs, since organic farmers must provide their animals with organic feed and pastures; use only organic health care practices, which prohibit the use of antibiotics or growth hormones; and (in the case of dairy cows) cover the cost of transitioning the herd from a conventional herd to an organic herd.
Many consumers are willing to pay more for organic food, but estimating how much more they are actually paying for organic options can be difficult due to comparability issues. Organic foods generally cost more for consumers due to higher production and labor costs, as well as limited supply. According to the USDA National Organic Program, food and other agricultural products labeled as organic in the United States must be produced and manipulated “through approved methods that integrate cultural, biological and mechanical practices that encourage resource cycling, promote ecological balance and conserve biodiversity.”. In addition, the “natural” label on foods means that they do not contain artificial flavors or colors, but that does not mean that they are organic or free of pesticides.
Some products have special demand considerations that could increase organic premiums; for example, parents may be more willing to pay for organic baby food for the short time that their babies and toddlers consume them. For those who shop in cheaper supermarkets such as Aldi or Lidl (both offer very few organic products), the difference between the costs of organic and non-organic groceries will be even more pronounced. Buying food requires paying attention to financial and eating habits, as well as personal desires or choices, such as eating organic products or skipping meat. The premium price of organic products for processed foods ranged from 22 percent for granola to 54 percent for canned beans.
Organic animals must be fed with organic feed, have access to the outdoors all year round on certified organic land, and cannot be given antibiotics. Organic food sales even grew during the Great Recession, as organic products were available at more outlets, and growth has continued ever since. .
