Organic for All? Breaking Down the Price Divide

Buying organic food can reassure consumers about the origins of their food. However, the price and paperwork behind certification are major barriers for small producers, especially in lower-income countries.

What does “organic” really mean?

Organic food is becoming an increasingly popular choice among EU consumers. In 2020, the EU organic market was worth more than €44 billion, roughly twice the market value of 2015.

Organic farming in the EU- a decade of organic growth”. Agricultural market brief N. 20, January 2023. European Commission. Accessed 17 November 2023

But what does “organic” really mean? According to the European Commission, it is a farm management and food production method that aims to reduce the environment's impact, encourage responsible use of natural resources, and preserve biodiversity.

REGULATION (EU) 2018/848 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 30 May 2018 on organic production and labelling of organic products and repealing Council Regulation (EC) No 834/2007. Accessed 06 August 2023

It’s also something the EU has shown great interest in prioritizing through recent policies, now aiming for 25% of EU agricultural land to be organic by 2030.

But while investing in a more environmentally friendly growing market seems like a win-win, converting to organic isn’t simple (or cheap) to do - especially for smallholders

farmers practicing small-scale agriculture (usually with less than <2 hectares of land).

For a product to be certified as organic, it must follow a long list of rules concerning every stage of the supply chain

Supply chain: the system of people and things that are involved in getting a product from the place where it is made to the person who buys it

Farmers can’t use GMOs, synthetic fertilizers, or any non-organic seeds in production. There are also rules regarding animal well-being: ensuring that livestock have access to open-air spaces, limiting animal stocking densities that cause overcrowding, and tighter limits on physical alterations to livestock, like beak trimming or dehorning cattle. Even the feed for animals must come from either the farm itself or from the local region (at least 70% for some livestock species). For those in the processed food market, products must also contain at least 95% organic ingredients.

If a product within or outside the EU meets all of the EU organic requirements, it can then qualify for the famous green leaf logo. But as you can see, ticking all of those boxes is asking a lot of the average farmer without the existing infrastructure in place to run a farm organically.

Editor’s note: While organic regulation impacts the growing, processing and shipment of products leaving the farm, it doesn’t indicate anything about human rights. For working conditions and a fair deal for farmers, you would be better off looking out for the Fairtrade certification, though this only applies to food from “developing countries”; it doesn’t cover food grown in Europe. You can learn more about Fairtrade

Getting organically certified

If a producer wants to gain organic certification, they’ll need to go through a transition period of 1 to 3 years depending on the type of farm. During this transition period, neither the farm nor its products can legally hold the organic logo while they are subject to strict controls to ensure any banned substances are no longer present in the land, animals, or feed. Inspectors will periodically check the soil for prohibited substances, check animal feed and living conditions, look at equipment, transport, cleaning, and maintenance products to make sure all requirements are being met. Inspectors also require documentation of every material that enters and leaves the farm and can buy samples anonymously at any time (for example, online) to check for the presence of prohibited substances.

REGULATION (EU) 2017/625 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL. Accessed 17 November 2023

When a producer has met all criteria over the transition period and has been successfully certified organic, additional controls are then carried out yearly to keep the certification.

Fun fact: Despite popular belief, lower quantities of certain fertilizers and pesticides are still allowed in organic food, but they must come from natural sources.

Do the premiums on organic produce pay off?

It’s not quick or easy to get certified, but the process can pay off.

One reason smallholders seek organic certification is the price premium they receive on organic produce. Food prices vary depending on the product and region, but organic food can be worth between 10 % and 300% more than comparable products grown without certification. Although, it is worth noting that not all of that premium always returns to the farmer. Typically, between 44% and 55% of that premium ends up in the farmer's pocket.

Jouzi et al. (2017) “Organic Farming and Small-Scale farmers: Main opportunities and Challenges ”. Ecological Economics, 132.Accessed 17 November 2023

Organic certification can also allow smaller producers wider access to markets they otherwise wouldn’t be able to reach. Without this organic premium, the international market is often too competitive for small and more sustainably oriented farms because they would have to compete with industrial agriculture with higher crop yields and economies of scale. Large industrial farms can also better spread the costs for export and invest in research and marketing.

Kirsten, Johann & Sartorius, Kurt. (2002). Linking Agribusiness and Small-Scale Farmers in Developing Countries: Is There a New Role for Contract Farming?. Development Southern Africa. 17. 503-529. Accessed 17 November 2023

But despite the potential to make more money in the future, the immediate certification costs can represent a significant barrier for producers - particularly in lower-income countries.

Giovannucci (2006) “Salient Trends in Organic Standards: the Opportunities and Challenges for Developing Countries” SSRN Electronic Journal. Accessed 08 August 2023.

Cost of certifications

For a farm in a lower-income country, the cost of certification for the first year can be more than 50% of their annual income.

Organic farming in the EU- a decade of organic growth”. Agricultural market brief N. 20, January 2023. European Commission. Accessed 17 November 2023

, Organic certification certainly has notable environmental and social benefits, but it also creates new issues. In some cases, the amount of money a farmer would have to invest upfront might prevent them from certifying as organic, even if their products technically follow all the rules needed to be deemed organic. In turn, this provides fewer opportunities to those already growing organically if they don’t hold the capital to become legally certified.

And even if the certification costs were manageable, the investment needed to continually meet organic standards might not be for those with small-scale operations. To comply with organic regulations, many producers would need to significantly upgrade facilities to ensure certifiable hygienic conditions are met, or additional land purchased to provide open-air space for animals. Even keeping accurate record-keeping systems creates an additional administrative burden that could require access to new training and education.

Meinshausen et al. (2019) “Group Certification Internal Control Systems in Organic Agriculture: Significance, Opportunities and Challenges “. FiBL

On the upside, if producers can manage to clear these barriers to entry, organic production should lead to an increase in income as price premiums, a reduced need for agricultural inputs, and better management widen profit margins.

Gómez et al. (2011) “Research Principles for Developing Country Food Value Chains”. Science. Accessed 17 November 2023

But with most vulnerable smallholders often unable to invest the cash and time into this process, it is a big ‘if’.

The role of NGOs

NGOs can offer limited support to small-scale farmers in the transition to organic. One way they can lend assistance is by providing guidance to navigate the paperwork and bureaucracy associated with going organic, another non-monetary barrier for farmers who haven’t had a conventional education. Another way NGOs can help is by connecting producers with similar goals to split the costs of certification, something the EU has made possible by allowing a collective certification for groups of small farms if they can meet certain criteria.

Organic farming in the EU- a decade of organic growth”. Agricultural market brief N. 20, January 2023. European Commission. Accessed 17 November 2023

While this is positive progress, it’s also not a straightforward solution. For the collective investment to make sense, the group of producers must be relatively large (up to 2000 people) leading to other complications for governing and managing decisions between farms.

Meinshausen et al. (2019) “Group Certification Internal Control Systems in Organic Agriculture: Significance, Opportunities and Challenges “. FiBL

Gómez et al. (2011) “Research Principles for Developing Country Food Value Chains”. Science. Accessed 17 November 2022

COMMISSION IMPLEMENTING REGULATION (EU) 2021/279 of 22 February 2021. Accessed 17 November 2023.

While NGOs can help to soften the impact of certification, the length of the certification process itself can make it hard for them to have a long-lasting impact. This is largely due to many NGOs having limited funding or time caps for development projects that are shorter than the probation period for becoming certified.

Moving forward

Organic certification can help consumers make informed decisions about the type of agriculture they are supporting. And every time we vote with our wallet, it signals the kind of food system we want to see.

But the process is far from perfect. Costs to farmers can be hard to shoulder, especially during the transition period before they can sell their produce as organic. At the same time, the organic certification doesn’t consider working conditions or a fair deal for farm workers.

But when faced with endless supermarket shelves that leave you feeling lost, certification can help. And if we can afford to eat double-certified Fairtrade-Organic products, we can be fairly confident that our diet is becoming more sustainable and socially just

About author

SS Engineers and Consultants is a premier engineering firm specializing in innovative design solutions, sustainable practices, and comprehensive project management. With decades of combined experience across various industries, their team of expert engineers and consultants delivers tailored services that meet the unique needs of each client, ensuring safety, efficiency, and cost-effectiveness in every project.

This line emphasizes their professionalism, expertise, and commitment to delivering high-quality results. If necessary, adjustments can be made based on specific areas of focus or achievements!