638 The Economics of Organic Agriculture
Since World War II, U.S. agriculture has reduced production costs by substituting petrochemicals for labor, often resulting in overuse of agricultural chemicals. Among the adverse results of chemical overuse are increases in certain pests, groundwater and surface water contamination, and surface water run-off. There is a growing perception that consumers bear the risk of pesticide use and farmers reap the profits. For farmers, the short-term risk of losing a crop that is already planted may take precedence over the long-term risks of such things as the pests developing resistance to pesticide, environmental damage, and applicator health risks. Alternative farming programs such as ICM and organic farming allow farmers to reconcile short-term risks and long-term benefits. Before farmers adopt an alternative system, they must be convinced that economic benefits from the alternative farming program surpass the costs incurred. Few studies have compared the cost of producing organic produce vs. using conventional production systems. One study found that net returns were slightly higher in ICM and organic systems that conventional ones. This is because of lower costs when using ICM systems and price premiums for organic crops. These results suggest that there may not be any trade-off between economic efficiency and environmentally friendly farming practices. If the society desires better environmental quality, it will be ready to pay premium price for the organic or ICM-grown vegetables. In a free-market system, farmers will use the market signals in the form of price, and they will produce accordingly.