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The Organic Price Premium

The Organic Price PremiumWe’ve all seen it at the grocery store—organic food can be shockingly expensive! Price premiums vary by product, ranging from a mere 7% premium above conventional prices for organic spinach to an 82% premium for organic eggs.

The organic price premium debate has gone on for over a decade now. Some experts claim that the costs outweigh the benefits, while others say that the premium is the only way organic farmers can receive a fair wage.

 

Why is Organic Food So Expensive?

There are many reasons that organic food costs more to produce than conventional food, which in turn raises the price. Some factors include:

  • The three-year transition period for converting conventional farmland to organic.
  • Smaller size of most organic operations, which has a negative effect on economies of scale.
  • Greater labor inputs.
  • Higher stewardship standards, which require expensive practices such as erosion control and rotational cover-cropping.
  • Lower yields.
  • Limited supply compared to demand.
  • Larger cut typically reserved to the farmer for his living.

The three-year transition process, in particular, is tricky for producers seeking organic certification. They have to use organic practices while accepting commodity prices that entire time, investing in new equipment and learning new farming methods at the same time. The good news is that this dilemma has led to the creation of certified transitional programs.

 

Is There Truly a Premium?

With this mind, do organic products actually receive a premium, or are the higher prices merely reflective of higher costs? There probably is a premium in many cases. The FAO notes that, in developing countries, food that is produced organically but that is not certified organic is often sold locally at the same price as conventional food. Prices for organic food in developing countries, the FAO states, tend to depend on “the specific consumer willingness to pay.”

Reasons some consumers have demonstrated a willingness to pay more for organic include:

  • Food safety.
  • Enhanced nutrition.
  • Better flavor.
  • Environmental benefits.

It is interesting to note that farmers’ market managers observe a different attitude toward price premiums among the participating farmers than is seen at grocery and health-food stores (see page 10 of this USDA report). At markets offering both organic and conventional produce, many organic farmers do not routinely charge a premium. Premiums are typically charged for something out of the ordinary:

  • Exceptional quality.
  • A rare type of produce.
  • Food sold at an upscale market.

 

The Downside of the Premium

That price premium can be a deterrent to shoppers, particularly during times of economic hardship. Expense is one of the top reasons organic buyers return to conventional food. Also, low-income families frequently cannot afford whole grains or fresh fruits, vegetables, and meats—let alone organic equivalents.

 

Trends in Organic Food Pricing

Currently, the high demand fostered by improving economic conditions is keeping the premium in place. While organic food was once decidedly a niche product, about two thirds of American shoppers now buy organic products at least occasionally. The demand is evidently strong enough that in 2016 Costco determined that it was worthwhile to offer organic farmers loans and financing for land and equipment in exchange for the first pick of all produce grown on the farm.

As organic food becomes more mainstream and the supply increases, however, the prices will likely start to decrease. The USDA notes that already three out of every four grocery stores carry some organic products. As evidenced by Costco’s move, stores are increasingly seeking out greater supplies to meet their demand. If organic truly becomes commonplace, the premium may become a thing of the past.

11 Applications for an Agricultural Interest Besides Farming

11 Applications for an Agricultural Interest Besides FarmingRunning a farm or ranch is not the only way to cash in on your agricultural interest. These days, there are plenty of fields where a knowledge of agriculture and agricultural sciences can be a plus, and where you will have an opportunity to aid those who have chosen to work the land.

Here are a few ideas:

  • Veterinary medicine. Practitioners experienced with livestock work closely with most large farms and many smaller ones, as well.
  • Inspections. Inspectors ensure that USDA and FDA regulations are enforced. Some work in laboratories, others in processing facilities.
  • Scientific research. Science and farming go hand in hand. The points at which agriculture and science intersect are too many to list here, but just to give you an idea:
    • Soil science, the study of the soil and its management and conservation as it relates to farming.
    • Botany, the study of plants of all types. Botanists may research anything from breeding crops for hardiness to the conservation of native species to new food, fiber, and medicinal uses for familiar plants.
    • Plant biology, the study of how plants work, particularly from a genetic perspective. Plant biology differs from botany in that the former seeks information in the lab while the latter seeks information in the field.
    • Animal sciences, a broad field covering the standard American livestock species plus other farm animals kept around the world. Animal scientists can focus their attention on subcategories including physiology, livestock management, nutrition, breeding/genetics, and diseases.
    • Food science, the study of and experimentation with food ingredients and processing techniques with a view to improving food products.
  • Agricultural engineering. Not the same as genetic engineering. This field involves designing logistical solutions to farming problems and needs. Machinery design is a major focus of agricultural engineering, but some engineers work with livestock housing, processing plants, food storage facilities, dams and reservoirs, or even water quality solutions to minimize pollution.
  • Historical scholarship. Some historians pin their focus on agriculture and rural living, preserving and interpreting the past of farming to aid us in understanding its present and future.
  • Agricultural economists. The study of all aspects of agribusiness, including management, law, policy, and rural sociology.
  • Agricultural meteorology. A specific branch of meteorology that connects weather events with their effects on crops and livestock. Agricultural meteorologists forecast crop yields, animal performance, and enterprise risk.
  • Agricultural communications. This field covers a wide array of talent from PR, advertising, and marketing experts to those who write about farming-related topics in magazines and newspapers.
  • Extension. Extension services provide much of the information beginning farmers rely on to get started.
  • Accounting. Many farms hire accountants and bookkeepers to make sense of those tangled numbers.
  • Trucking and heavy equipment operation. These people do everything from transport food to operate hay balers.

Kansas Populist Movement Basics: The End

Kansas Populist Movement Basics: The End
“Sockless Jerry” Simpson

Populist candidate James Weaver did not become president in 1892, as most undoubtedly know. However, he did win 8.5% of the popular vote, which was considered an impressive amount for a third-party candidate. He also won the states of Kansas, Colorado, Nevada, and Idaho.

The Populist movement was far more successful in some states than others. As previously mentioned, Populist strongholds tended to be states in which farmers were hard hit by drought and economic turmoil. One of these states was Kansas.

 

Populists in Power

When the Kansas People’s Party first organized in Topeka in 1890, it enjoyed considerable political success across the state. The lower house of the state legislature was taken by Populists. Rancher “Sockless Jerry” Simpson, the origin of whose nickname is clouded in myth but may have come from his association with poor farmers, won a seat in the United States House of Representatives. Long-time U.S. Senator John J. Ingalls, who had been involved in Kansas politics since the territorial days, lost his seat to Populist editor William Peffer.

In 1892, a People’s Party candidate became Kansas governor with the election of Lorenzo D. Lewelling. The party also won the upper house of the state legislature, while the lower house remained divided between Populists and Republicans, leading to a rather bizarre situation known as the Legislative War.

The “war”  began as a dispute over election results. The Republicans claimed to have taken control of the Kansas House, while the Populists asserted that they had done so through election fraud, making the People’s Party the majority. At first, the two parties met in the same chamber at different times to pass legislation independently, but tension finally mounted to the point that the Populist members locked themselves into the House and the Republican members gained entry via sledgehammer. The Kansas Supreme Court eventually decided in favor of the Republicans.

 

Fusion and the End of the Populist Era

Kansas Populist Movement Basics: The End
William A. Peffer

In many elections, Populist candidates won their offices through the support of the Democrats. In fact, in the Kansas elections of 1892, the state’s Democratic Party did not nominate its own candidates, but endorsed the People’s Party ticket instead. Thus, the precedent was early on established for joining forces with the older party in a move known as “fusion.”

This created a deep divide within the People’s Party, with one faction wanting to ride the coattails of the better established Democratic Party to victory and the other cautioning that fusion would be the end of the party. Populist Thomas E. Watson warned that “fusion means the Populist party will play Jonah, and [the Democrats] will play the whale.”

When William Jennings Bryan was nominated as the 1896 Democratic presidential candidate on a platform of free coinage of silver, the People’s Party was in a quandary. Their convention occurred after the Democratic convention, and it was clear that it was likely to be a divisive event. Never before had fusion been such an attractive option, but there was a sentiment that the Populists should demand recognition from the Democrats on more issues than simply silver.

Fusion was the course pursued by the majority of the People’s Party delegates when the votes were cast. Those against fusion attempted to organize a counter-rally and regain control of the convention, but the lights in the meeting hall abruptly went out. William Jennings Bryan became the Populist nominee for president. However, the People’s Party also took the unusual course of rejecting his Democratic running mate Arthur Sewall because he was a banker and railroad man and instead nominating Thomas Watson for vice president. This created a rather awkward situation, as Watson positively refused to campaign for Bryan, but was equally obstinate in declining to step aside for Sewall. All this time, the Republicans cheerfully announced that the Democrats had allied themselves with anarchists. William Jennings Bryan ultimately lost the presidency to Republican William McKinley.

A few antifusion members of the People’s Party held out for over a decade, but the party was officially disbanded in 1908.

 

Impacts of Populism on Subsequent Events

Kansas Populist Movement Basics: The End
William Jennings Bryan

While antifusion Populists were certainly correct in their prediction that fusion would destroy the identity of the party, it was by no means the end of their philosophies. The Populist movement gradually morphed into the subsequent Progressive movement. Progressive candidates, regardless of their party affiliation, tended to support anti-trust legislation, federal regulation of private industry, and federal support for the farmer and the laborer.

During his presidency, Theodore Roosevelt, while highly critical of the People’s Party, became an outspoken advocate of the Populist-friendly policy of trust-busting. Direct election of United States senators became a reality in 1912. The general notion that farmers and laborers should receive federal assistance during times of economic disaster became a concrete fact with Franklin D. Roosevelt’s New Deal.

Thus, while the People’s Party did not achieve most of its ambitions itself, the movement marked the end of the Gilded Age and ushered in a new phase of federal government.

 

Helpful Resource

Legislative War Artifacts
More on the Legislative War, along with several artifacts on display at the Kansas Museum of History.

Kansas Populist Movement Basics: The Beginning

Kansas Populist Movement Basics: The Beginning
A Populist convention in Nebraska in 1890

The Populist movement of the late 1800s is a major topic in Kansas history. A brief glance at history books tells us that the populism of that era was more or less radical agrarianism. While this is basically true, the topic is far more complex than this.

What did the Populists believe? How did they try to achieve it? And what became of them? Lengthy books can be (and have been) written on the subject. This week and next, we’ll try to summarize the main points.

 

Populist Principles

To begin with, what Populists advocated can be summed up as “economic reform.” Not all Populist leaders agreed on the precise reforms to be implemented, but there were several important common themes.

The major policies that most Populists agreed on were:

  • Abolishing national banks.
  • Establishing a graduated income tax.
  • Preventing foreign ownership of land.
  • Limiting the working day to eight hours.
  • Freely coining silver to make currency more readily available.
  • Giving the government control of railroads, telegraphs, and telephone companies.

Populists also typically agreed that senators should be directly elected by the people. At the time, senators were selected by the state legislatures.

The topics that proved to be slightly more controversial among the Populists tended to be non-economic reforms. However, the attention brought to bear on these issues during the movement tended to secure varying levels of reform in subsequent years. Examples of non-economic reforms advocated by sizable numbers of Populists included:

  • Prohibition.
  • Women’s suffrage.
  • Equal justice for African-Americans.
  • Term limits for the president and other elected officials.

 

The Origins of the Movement

Many historians have noted that Populism tended to flourish in areas where farmers suffered hardship, while the movement simply could not gain a foothold in areas where farmers were prosperous. This highlights one of the reasons that Populism’s stronghold was Kansas. Kansas had enjoyed favorable weather and a dramatic economic boom, climaxing in 1887, but drought and debt were defining features of the late 1880s and early 1890s. No other state had more mortgaged acres at the time. A glut of agricultural products could only fetch low prices, while railroad rates were soaring. Some farmers coped by moving to greener pastures; others demanded assistance from the state, as well as from the nation.

In the midst of this dissatisfaction with the way agricultural conditions were going was a dissatisfaction with corruption, both in the government and on Wall Street. Some reformers felt that Wall Street was practically running the federal government. Trust in either major political party was dwindling rapidly.

 

Kansas Populist Movement Basics: The BeginningParty Organization

The immediate predecessor of the People’s Party, identified with the Populist movement, was the Farmers’ Alliance. The Alliance in turn had arisen out of the Grange, originally a secret society dedicated to the education and social enrichment of rural residents. Grange members in various states often pooled their money to receive discounts on farm equipment and purchase their own grain elevators. After the nationwide economic fiasco known as the Panic of 1873, caused by rampant speculation on railroads and other enterprises, the Grange became a lobbying organization advocating increased government regulation in affairs affecting the farmer, such as shipping rates.

The Farmers’ Alliance was first established in Texas in 1874 to protect land titles and capture horse thieves. In 1889, the Kansas Farmers’ Alliance arose from the ruins of the Grange, which had been beset by financial difficulties and warring factions. This organization at first sought to promote the interests of the farmer without entering into politics, but the 1890 elections stirred it into further action. A March convention held in Topeka saw county Alliance presidents demanding reduced railroad rates, direct election of senators, and laws to give farmers more time to pay mortgages, among other reforms.

Later that year, the People’s Party was organized in Topeka to provide candidates that were pledged to carry out precisely the types of reforms that the Alliance demanded. This party came to national attention over the course of the next few years as suspicions grew that both the Democrat and the Republican parties had sold themselves out to big business.

Some reformers began to talk of combining all the various state Farmers’ Alliances to establish their own political party, dedicated to the farmer and the laboring man. In 1892, a convention was held in Omaha, Nebraska, to establish the national People’s Party. The platform that was adopted embodied most of the principles listed above in which the Populists were unanimous. The People’s Party also nominated James Weaver as their presidential candidate. The fledgling party was ready for the campaign trail.

Get Ready for October 2016

Get Ready for October 2016October is just around the corner! Are you ready to start a business, explore nature, and live by faith?

  1. Start and run your own small farm business.
  2. Find out how livestock are upgraded.
  3. Explore options for super-small-scale farms.
  4. Identify the wildflowers and grasses of Kansas.
  5. Love God with all your mind.
  6. Save money on seeds.
  7. See the stars.
  8. Understand the importance of the 100th meridian in history.
  9. Ground that wayward chicken.
  10. Discover the key to living by faith.

The Dirt-Cheap Green Thumb

The Dirt-Cheap Green Thumb

Gardening on a budget doesn’t mean that you have to sacrifice looks or taste!

The Dirt-Cheap Green Thumb: 400 Thrifty Tips for Saving Money, Time & Resources In and Around the Garden by Rhonda Massingham Hart will show you how to make the most of your gardening dollars, while still enjoying a beautiful and productive garden. These tips will improve your efficiency every step of the way, from choosing your garden site to using the harvest.

Continue reading The Dirt-Cheap Green Thumb