A Comparison of Financial Returns During Early Transition from Conventional to Organic Vegetable Production

Sellen, D.
Tolman, J.H.
McLeod, G.R.
Weersink, A.
Yiridoe, E.K.
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University of Guelph

Relative profitability was compared for five vegetables (sweet corn, green bean, cabbage, tomato, Spanish onion) during the second and third years of transition from conventional to organic production practice. Input and output data developed in field experiments in 1991 and 1992 revealed average organic yields were significantly lower than those from conventional production systems. Decreases ranged from 8 percent for green beaffto 45 percent for tomato. Input costs were generally higher for organically grown crops than for those produced conventionally. As a result of the lower yields and higher costs, profits to organic production were significantly lower than conventional at the same output price level. While all five conventionally produced vegetables showed positive profits per hectare ranging from $544 for green beans to $2,063 for cabbages, net returns from organic horticulture were negative for all five crops. The losses ranged from $732 for cabbages to $2,628 for tomatoes. For zero profit, organic produce must be priced from 13% for cabbages to 57% for sweet corn above conventionally produced vegetables. Limitations of the study, such as reliance on research station experiments and the inability of financial budgeting to capture all social costs and benefits of each production system, prevent drawing strong conclusions about the economic viability of organically grown horticulture. Since organic yields are generally lower in the transition period from conventional to organic production, additional economic analysis at a later period will be necessary.

cabbage, conventional production systems, green beans, organic, organic production systems, profitability, Spanish onion, sweet corn, tomato