Research shows organic agriculture boosts local economies
This white paper finds that organic hotspots boost median household incomes by an average of $2,000 and reduce poverty levels by an average of 1.3 percentage points.
The Organic Trade Association (OTA), Washington, D.C., released conclusive research that for the first time links economic health at the county level to organic agriculture. This study also shows that organic food and crop production–and the business activities accompanying organic agriculture–creates real and long-lasting regional economic opportunities.
The white paper, titled "U.S. Organic Hotspots and their Benefit to Local Economies," was prepared by Penn State Agricultural Economist Dr. Edward Jaenicke, and finds that organic hotspots–counties with high levels of organic agricultural activity whose neighboring counties also have high organic activity–boost median household incomes by an average of $2,000 and reduce poverty levels by an average of 1.3 percentage points.
Organic activity was found to have a greater beneficial economic effect than that of general agriculture activity, and even more of a positive impact than some major anti-poverty programs at the county level.
"We know that organic agriculture benefits our health and our environment," says Laura Batcha, CEO and executive director. "This significant research shows organic can also benefit our livelihoods and help secure our financial future."
"Organic agriculture can be used as an effective economic development tool, especially in our rural areas," she adds. "The findings of this research show organic certifiers and the transfer of knowledge and information play a critical role in developing organic. And, it provides policymakers with an economic and sound reason to support organic agriculture and to create more economy-stimulating organic hotspots throughout the country."
Organic is one of the fastest-growing sectors of the U.S. food industry, according to OTA. Organic food sales in 2015 jumped by 11% to almost $40 billion, outstripping the 3% growth rate for the overall food market. Organic crops command a significant price premium over conventionally grown crops. As a result, interest in organic at the production level has grown as the demand for organic has risen. More farmers are transitioning to organic production, more organic businesses are sprouting.
But, what does all this interest in organic and organic activity mean for local economies?
"This research systematically investigates the economic impacts of organic agriculture," says Jaenicke. "Its important findings show that organic contributes to the economic health of local economies. The growing market interest in organic agriculture can be leveraged into effective policy for economic development."
About the report
The white paper summarizes and discusses three research papers that investigate organic agriculture hotspots in the United States and systematically assesses the impact of organic agriculture on local economies. It identifies 225 U.S. counties as organic hotspots, then looks at how these organic hotspots impact two key county-level economic indicators—the county poverty rate and median household income.
Organic hotspots are as diversified as the organic industry, and represent the various kinds of organic agricultural activity and accompanying businesses—crop production, livestock production and organic processors. Organic hotspots are found throughout the country, but specific examples include Monterey County in California, Huron County in Michigan, Clayton County in Iowa and Carroll County in Maryland.
The white paper also identifies what factors create organic hotspots, how the effect of organic agricultural hotspots compare with those of general agriculture (combined organic and conventional agriculture) and recommends specific policies to foster more organic economic hotspots throughout the nation.
Specifically, the research finds that:
- Counties within organic hotspots have lower poverty rates and higher median annual household incomes. On average, county poverty rates drop by 1.3%, and median income rises by over $2,000 in organic hotspots. The same beneficial results are not found for general agricultural hotspots. Also, organic hotspots were found to have a positive impact at the county level comparable to such major anti-poverty programs as the Supplemental Nutrition Assistant Program and even greater than the Special Supplemental Nutrition Program for Women, Infants and Children.
- Outreach and knowledge transfer are critical in creating organic hotspots. The prevalence of outreach services by organic certifiers is found to play one of the strongest roles in organic hotspot formation. Also, whether a certifier is government-sponsored, by a state department of agriculture for example, is another key factor in enabling organic hotspots.
- Organic agriculture can be used as an economic development tool. Policymakers at all levels—local, state and national—have a proven economic reason to support organic agriculture and to create more economy-stimulating organic hotspots.
The research contained five policy recommendations as a result of the findings:
- Promote organic agriculture at the federal, state and local level.
- Focus on rural development, organic transition, capital structures and barriers to investment.
- Expand outreach efforts and facilitate network effects.
- Target specific geographic areas for development.
- Build broader coalitions to help promote organic agriculture.