The Unequal Costs of Going Organic

Buying organic food can reassure consumers about the origins of their food. But 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 2015.¹ 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 impact on the environment, encouraging responsible use of natural resources and the preservation of biodiversity.² It’s also something the EU has showed great interest in prioritising 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. For a product to be certified as organic, it must follow a long list of rules concerning every stage of the supply chain. Farmers can’t use GMOs, synthetic fertilisers, 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.²

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 existing infrastructure in place to run a farm organically.

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 existing infrastructure in place to run a farm organically.

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 or 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 any time (for example, online) to check for the presence of prohibited substances.³ 

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.

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.⁴

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.⁵ 

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.^6,4

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.^1,7,13 This is particularly problematic for smaller farmers who rely on regular income and may have little savings or time to spare for future investment. Moreover, for those first years of transition, the farmer doesn’t see any benefit of the organic premium at market. At the same time, yields can drop when conventional practices like synthetic fertilisers and pesticides are no longer used, which can further compound financial hardship for small producers.^8,9

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.¹⁰ 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.¹¹ 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 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.¹ 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.^10,11,12

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

* Fairtrade uses the term “developing countries” to describe the origin of its products. FoodUnfolded acknowledges that this is a somewhat problematic term which can infer hierarchy between societies.