Submitted to: American Peanut Research and Education Society Abstracts
Publication Type: Abstract Only
Publication Acceptance Date: 5/23/2007
Publication Date: 6/25/2007
Citation: Lamb, M.C., Cantowine, .E., Sorensen, R.B., Nuti, R.C., Tilman, G., Smith, E.B. 2007. Economics of Organics versus Conventional Peanut and Cotton. American Peanut Research and Education Society Abstracts. Interpretive Summary: none required.
Technical Abstract: The demand for organically produced peanuts and cotton represent the fastest growing sector for each of these commodities. Significant price premiums at the producer level are associated certified organic commodities. However, such incentives to convert a field or farm from conventional production to an organic production system are not easily or quickly observed due to the transition period required for products to be marketed as “Organic”. Two years (2004 and 2005) of research on an irrigated and non-irrigated peanut/cotton transitional organic rotation system were completed at the USDA/ARS National Peanut Research Laboratory’s Multi-crop Irrigation Research Farm. Official “Organic Certification” was received in 2006 and research was continued in 2006 in conjunction with on-going irrigated and non-irrigated research in conventionally produced peanut/cotton rotations to provide direct comparisons in terms of production cost(s), yield, grade, and quality. In 2006, peanut yields in the conventional plots were 274 and 1553 lb per acre higher than the non-irrigated and irrigated organic yields, respectively. The 2006 conventional cotton yields were 96 and 380 lb per acre higher than the non-irrigated and irrigated organic yields, respectively. The FarmSuite In-Season Cost Monitoring System (developed at the National Peanut Research Laboratory) was used to monitor all crop production inputs from initial tillage to final harvest operations. Final yield and farmer stock grade are recorded to calculate gross revenue per acre. These data, taken comparatively between the organic and conventional production systems, are entered into the WholeFarm Cross Commodity Breakeven Price matrix that will calculate how much the price of one commodity must change such that the economic net returns are exactly the same between commodities. More simply put, this will calculate the exact price premium (and associated yield) that a farmer must receive for organic peanut before he/she should consider converting a field or farm from conventional production to organic production (including the transition period). This will provide producers that are interested in organic production information on production cost(s), expected revenue, and required price premiums to improve their decision making and minimize production and marketing risk.