The Economics of Organic Farming

Growing local organic food may be the best path toward economic
recovery. It may also be key to building stronger and healthier
communities.

"Our [struggling] economy is making a compelling case that we shift
toward more local food," said Ken Meter of the Crossroads Resource
Center in Minneapolis. "The current system fails on all counts and
it's very efficient at taking wealth out of our communities."

Meter spoke at the annual conference of the Midwest Organic &
Sustainable Education Service (MOSES) held recently in La Crosse, Wisc.

The bank bailouts have stabilized the crisis but they haven't addressed
wealth in local communities, he said. It's likely that change may come
through food because it is the third largest household expense (12.4
percent or $6,133) and $1 trillion nationally. The average consumer
spends $49,638 per year with housing the largest expense (34 percent or
$16,900), transportation number three (17.6 percent or $8,753) and
insurance number four (10.8 percent or $5,336) (https://www.visualeconomics.com/how-the-average-us-consumer-spends-their-paycheck/).

"Everyone needs to eat and a local food economy forces us to think
differently," said Meter.

Meter shared figures from his study of southwestern Wisconsin where
106,000 residents earn a total income of $2.7 billion. However, 30
percent of the people live below the poverty line. Out of 6,804 farms,
586 farmers sell less than $10,000 per year while 11 percent sell more
than $100,000. Only 382 farms sell directly to consumers and 133 farms
are organic. Such disparities result in lop-sided and unfair policies
that need to be changed to meet everyone's needs, Meter pointed out.

The past 40 years have seen rising sales and new markets for farm
products, he said, but the expense of running these operations is
mounting faster than the income. In fact, there has been a steady
decline in income every year since 1969 except during the OPEC crisis
in 1973-74. That's the year former Secretary of Agriculture Earl Butz
ramped up production and sold wheat to the Soviet Union.

However, overproduction eventually led to the farm credit crisis in
the1980s, which resulted in much pain over family farm foreclosures
including over 913 farmer suicides in Wisconsin, Minnesota, North
Dakota, South Dakota and Montana (https://www.nytimes.com/1991/10/14/us/farmer-suicide-rate-swells-in-1980-s-study-says.html).
For example, since 1969, farmers in southwestern Wisconsin made $166
million less despite the fact that they doubled their productivity.
Meanwhile, they spent $429 million more equipment and chemical inputs.

"A community-based system of agriculture is all about relationships,"
said Meter who predicts that "over time, communities will choose
organic food...because they know the farmer is taking care of the
land."

Meter believes that in general, community-based organic farms make four
major contributions: good health and nutrition for the population; a
fair distribution of wealth among farmers; connections between people
since food is so central to American and ethnic cultures; and the
capacity for farmers, not corporations, to decide what foods to
produce.

Government subsidies keep the industrial food system afloat because
farmers are paid to produce below cost, said Meter. In southwestern
Wisconsin, it took $434 million to raise $404 million in produce per
year. Subsidies amounted to $21 million, which left a $10 million
loss. Farmers made up this loss in off-farm income (89 percent of farm
family income), renting out land, and other money-making ventures.
Since 2002, 53 percent of farmers reported losses after subsidies,
according to the Bureau of Economic Analysis.

"This is not a healthy farm economy especially since $135 million in
food is purchased outside the region," said Meter. "We need to cut
down that $135 million by sourcing food locally."

As it is, the national average of buying local is only .8 percent and
the effect is insidious. Wisconsin made $2 billion less on its farm
products than it did in 1969. In 2009, it made the same
income-adjusted for inflation-as it did in 1932.

"This is a startling reality the general public is not thinking about
because it is so far removed from farms," said Meter. "These are
losses in the breadbasket of America! This is not a lucrative way to
farm."

Meter believes that if buyers commit themselves to invest in organic
and locally-grown agricultural products, farm income would change.
However, people would have to understand how such a strategy would
benefit them and their community at the same time. It would require a
sense of community or ownership over a place where people were unified
on the basis of trust, mutuality, and support and not just a shared
geography.

For example, if people in southwestern Wisconsin bought just 25 percent
of their food from local sources, all production costs would be offset
and create $33 million in new farm income.

"It is not a trivial thing to source food through local people," said
Meter. "That helps fund communities and their schools."

Meter cited several examples where farmers have been able to invest in
local and organic production AND make a difference in their
communities.

Organic Valley started out in 1988 with $0 in sales and last year it
made $532 million.

"This is a stellar example of a farmers cooperative where the price is
fair and farmers work to make it good for all" said Meter. "It is
strong, sensible thinking."

Black Hawk, Iowa, created 475 new jobs in fruits and vegetables
totaling $6.3 million in income for the community.

Will Allen started out with earthworm compost and has reduced
Milwaukee's cost of garbage dumping significantly.

A factory shut down in Viroqua, Wisc. and moved its operations to
another state. City leaders confronted the company and asked what it
would do for the community. In response, the company ended up selling
its 100,000 square foot building, which allowed the city to create a
regional food processing center, a fitness center, a bakery and
cafeteria. The building is now 96 percent occupied.

In Eau Claire, Wisc., farmers, the hospital food service, distributors,
and truckers teamed up to create the Food Buyers Co-op.

In Burlington, Vermont, a bakery-to-school program was developed where
2,000 extra artisan loaves were sold for $4 with $2 going to the bakery
and $2 going to the school. It created a new profit margin for the
bakery.

Such arrangements break down self-interest motives to help move
everyone in the community forward, said Meter.

In Northfield, Minn., Home on the Range Poultry created a Latino/Anglo
cooperative on quarter-acre sites where they raise chickens. There are
30 to 40 sites and the company owns its own processing center.

"The food systems of the future will also involve rethinking our habits
of getting our food cheaply," concluded Meter. "Such change can build
wealth in our communities."