Farm Transitions: Valuing Sustainable Practices—Organic Profits

This example uses organic crop enterprise budgets from Iowa State University Extension, and assumes a four-year crop rotation: corn – soybean – oats + alfalfa – alfalfa. These budgets assume a 17% yield reduction for organic corn and a 20% yield reduction for organic soybean, compared to conventional crop yields (1).

The amount of yield reduction due to organic production is hotly debated. Research at the University of Minnesota from 1993 to 1999 with land that had completed the three-year transition period from conventional to organic showed yield reductions of 7% for corn and 21% for soybeans compared to a high-input conventional system (2). Depending on the length of time the organic system has been in place, the management skill of the farmer, weather conditions during the growing season, and other factors, organic crop yields may sometimes equal or even outpace conventional yields.

University of Minnesota researchers looked at 22 studies from across the United States and found that organic corn yields ranged from 59% to 108% of conventional corn yields, with a median of 86%. Organic soybean yields ranged from 50% to 113% of conventional soybean yields, with a median of 92% (3). The Iowa budgets used here, therefore, are based on fairly middle-of-the-road estimates for an organic farm that has finished the three-year transition period.

Net returns to management (costs for labor, equipment operations, seed, fertilizer, etc., to plant, tend, harvest, and dry the crop have been deducted; as well as the cost of land rent per acre):

  • Organic Corn: $988/acre
  • Organic Soybean: $478/acre
  • Organic Oat + Alfalfa: $228/acre
  • Alfalfa: $191/acre
  • four-year rotation average: $471.25/acre (round to $470/acre)

Note: It may look very tempting to just raise organic corn and soybeans for those high per-acre returns, and not do the four-year rotation. However, a two-year corn and soybean rotation is not a certifiable organic system. Longer rotations are required as part of an organic farm plan (4).

References:

(1) Organic Crop Production Enterprise Budgets. July 2011. Craig Chase, Kathleen Delate, Ann Johanns. Iowa State University. www.extension.iastate.edu/agdm/crops/html/a1-18.html (accessed 8/23/13).

(2) Long-Term Effects of Crop Management: Yield. April 2004. Results from the VICMS study at the Southwest Research and Outreach Center, Lamberton, Minnesota. Paul Porter, Dave Huggins, Catherine Perillo, Steve Quiring, and Kent Crookston. University of Minnesota. http://swroc.cfans.umn.edu/prod/groups/cfans/@pub/@cfans/@swroc/documents/asset/cfans_asset_236359.pdf

(3) Productivity, economics, and soil quality in the Minnesota variable-input cropping systems trial. 2013. Coulter, J. A., Delbridge, T. A., King, R. P., Allan, D. L., and Sheaffer, C. C. Online. Crop Management doi:10.1094/CM-2013-0429-03-RS. www.plantmanagementnetwork.org/
pub/cm/symposium/organic/farm/
variable/variable.pdf
(accessed 8/27/13).

(4) Minnesota Guide to Organic Certification. 2007. Jim Riddle and Lisa Gulbranson. http://conservancy.umn.edu/
bitstream/51829/1/MN_Guide_to_
Organic_Certification.pdf
(accessed 8/27/13).