The economics of organic agriculture, a subfield of agricultural economics, encompasses the entire process and effects of organic agriculture in terms of human society, including social costs, opportunity costs, unintended consequences, information asymmetries, and economies of scale.
The European Union subsidises organic farming, in large part because these countries want to account for the externalities of reduced water use, reduced water contamination, reduced soil erosion, reduced carbon emissions, increased biodiversity, and assorted other benefits that result from organic agriculture.
Traditional organic agriculture is labour and knowledge-intensive, whereas conventional farming is capital-intensive, requiring more energy and manufactured inputs.
The World of Organic Agriculture 2010: Key Results
The main results of the latest global survey on certified organic agriculture show (most data end of 2008; Research Institute of Organic Agriculture or FiBL):
- Since 1990, the market for organic products has grown from nothing, reaching $55 billion in 2009 according to Organic Monitor. This demand has driven a similar increase in organically managed farmland.
- Organic agriculture is today practiced in 160 countries and 37.2 million hectares of agricultural land – representing approximately 0.9% of total world farmland (2009) – are managed organically by 1.8 million farmers. Most of them from developing countries.
- The global sales of organic food and drink reached 54.9 billion US dollars in 2009.
- The regions with the largest areas of organically managed agricultural land are Oceania (12.1 million hectares), Europe (8.2 million hectares) and Latin America (8.1 million hectares).
- The countries with the most organic agricultural land are Australia, Argentina, China and Brazil.
- The highest shares of organically managed agricultural land are in the Falkland Islands (36.9%), Liechtenstein (29.8%) and Austria (15.9%).
- The countries with the highest numbers of producers are India (340,000 producers), Uganda (180,000) and Mexico (130,000). More than 1/3 of organic producers are in Africa.
- On a global level, the organic agricultural land area increased in all regions, in total by almost 3 million hectares, or 9%, compared to the data from 2007.
- 26% (or 1.65 million hectares) more agricultural land under organic management was reported for Latin America, mainly due to strong growth in Argentina.
- In Europe the organic agricultural land increased by more than 0.5 million hectares, in Asia by 0.4 million.
- About 1/3 of the world’s organically managed agricultural land – 12 million hectares – is located in developing countries. Most of this land is in Latin America, with Asia and Africa in 2nd and 3rd place.
- 31 million hectares are organic wild collection areas and land for bee keeping. The majority of this land is in developing countries – in stark contrast to agricultural land, of which 2/3 is in developed countries.
- Further organic areas include aquaculture areas (0.43 million hectares), forest (0.01 million hectares) and grazed non-agricultural land (0.32 million hectares).
- Almost 2/3 of the agricultural land under organic management is grassland (22 million hectares). The cropped area (arable land and permanent crops) constitutes 8.2 million hectares, which represents a 1/4 of the organic agricultural land.