Organic Agriculture Commands Up to 35% Higher Profit Margins than Conventional

Art by Mateo Aguilar

Art by Mateo Aguilar

I recently had the pleasure of reading Jean-Martin Fortier’s The Market Gardener: A Successful Grower’s Handbook for Small-Scale Organic Farming. This short and straightforward book does an excellent job of explaining the business model behind a profitable, one and half acre “market garden.”

Fortier uses biologically intensive cropping systems to save space, relies mostly on hand-powered tillage practices to save fuel, and methodically rotates his crops for ultimate soil fertility and customer happiness.

It’s a lovely book that would make anyone want to quit their job and start an organic farm immediately. But what’s most impressive about Fortier’s farm, is one simple metric: annual profit per acre.

Fortier sells $140,000 worth of produce each year on just one and a half acres. With profit margins of approximately 45%, he nets $65,000 in annual profit, or $43,300 per acre. Converting that number to USD (since Fortier’s farm is located in Quebec, Canada) that’s over $35,000 USD in annual profit per acre.

Now consider this: according to the USDA, average annual gross revenue for one acre of conventionally grown corn in 2014 was $680. Once you subtract the cost of rent, fertilizer, pesticides and fuel, many conventional corn farmers take a net loss per acre.

So on one hand there is an organic farmer in Quebec, where the ground freezes for a good part of the year, netting $35,000 USD per year per acre, and on the other, there is a conventional corn farmer making a few hundred dollars per year per acre and in many cases, taking a loss.

Let’s temporarily ignore everything we already know about why conventional corn farming isn’t the greatest use of our natural resources. From purely a profit per acre perspective, why would anyone want to be in the conventional corn growing game when consumers like the ones who patronize Fortier’s charmingly named, Les Jardins de la Grelinette, are willing to pay such a premium for organically grown vegetables?

But wait, you say, I’m not comparing apples to apples. Well luckily, someone else is. A recent study published in the Proceedings of the National Academy of Sciences (PNAS) looked at data from 55 different crops across 14 countries and found that organic agriculture was 22 to 35 percent more profitable than conventional.

Why? Because people are willing to pay a premium for higher quality products. But what happens when the market becomes flooded with organics and these premiums fade away? This probably isn't going to happen for awhile. Despite the favorable profit margins associated with organic agriculture, only one percent of the world’s agriculture is grown organically. 

Being a successful entrepreneur is all about finding the most creative ways to capitalize on the resources at your disposal, whether that be cash in the bank, boundless personal motivation, an excellent network, or an acre of land. It is becoming harder and harder to justify conventional farming from a health, environmental and now economic perspective. The revolution continues.