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Organic and conventional wheat production: Examination of energy and economics
Agro-Ecosystems, 4 (1978) 367--376
367
© Elsevier Scientific Publishing Company, Amsterdam -- Printed in The Netherlands
ORGANIC AND CONVENTIONAL WHEAT PRODUCTION: EXAMINATION OF ENERGY AND ECONOMICS
G.M. BERARDI
Department o f Natural Resources, CorneU University, Ithaca, New York 14853 (U.S.A.) (Received 8 March 1977)
ABSTRACT Berardi, G.M., 1978. Organic and conventional wheat production: examination of energy and economics. Agro-Ecosystems, 4 : 367--376. Small~cale wheat production by conventional farming methods averaged 48% higher energy inputs and only 29% higher yields per hectare than wheat produced by organic farming methods. Process analysis was used in evaluating the direct and indirect energy requirements of both production practices. The economic costs averaged 29% less per hectare for conventional wheat production than for organic wheat production, using a standard accounting procedure.
INTRODUCTION
In the United States, the trend towards substitution of inexpensive fuel energy for expensive h u m a n muscular energy has made agriculturea significant energy consumer (National Academy of Sciences, 1975). Seventy-five percent of all inputs were purchased off the farm in 1970, compared to 2 5 % in 1910 (USDA, 1975). Besides the energy costs involved in current agriculturalmethods, concern has been directed towards the economic costs of maintaining this level of agriculture.With agriculturalsurpluses in North America commonplace, taxpayers have been supporting supply management policies,including farm subsidies and, until recently, costly storage programs (National Academy of Sciences, 1975). In addition, there has been concern among sociologistsregarding the displacement of agriculturallaborers as farm operations have become mechanized (Smith, 1970). Within the last 50 years, 5 million fossilfuel tractors have replaced 25 million draft animals (Agway Cooperator, 1976) and 9 million agricultural workers (National Academy of Sciences, 1975) in the United States alone. This trend has accelerated in recent years, with the proportion of tractors over 100 horsepower sold in the United States increasing from 2% in 1965 to 46% in 1976 (Shannon, 1977).
368 Important to note also is the increasing effort to have technology substitute for soil fertility (Perelman, 1975). Where previously manures and rotations were exclusively used, now commercial fertilizers and other technologies are employed to renew soil nutrients as well as support continuous cropping practices (USDA, 1936 and 1968). The increased use of commercial fertilizers (in the developed countries) currently faces environmental and energy constraints. In the United States energy consumption in agriculture ranked third among major industrial consumers in 1968 (National Academy of Sciences, 1975). Dependence upon foreign sources of petroleum and gas has grown (Ford Foundation, 1974) as the discovery and production of domestic energy supplies has not kept pace with demand (Lincoln, 1973). As the price of energy rises, domestic fuel supplies can be increased. Yet much of these fuels are finite and thus the energy problem must also be approached from the standpoint of energy conservation. As fossil fuel reserves diminish, research on crop production practices less vulnerable to the effects of large price increases of fossil fuel agricultural inputs will be important. Those practices which are economically viable as well as energetically frugal, would seem to be of most value if energy conservation is to be a national priority. In this article, energy production costs are determined for wheat produced by organic (low-energy) and conventional (high-energy) farming methods. Included also is an economic cost analysis, using several different accounting procedures. DATA AND METHODS Ten conventional farmers, growing winter wheat in 1974--1975, were selected from a larger listing of farmers obtained from the New York State Farm Cost Account Project. According to the project director, these farms were representative of the better managed farms in New York State (Snyder, 1975). They were commercial, full-time farm businesses. The organic farms were selected from the Rodale Press list of organic growers. Only 10 farmers qualified in 1974--1975 as commercial, organic wheat growers in New York and Pennsylvania. These 10 farms served as a comparison group in this study. Winter wheat on the organic farms averaged 7 hectares compared to 13 hectares on the conventional farms. Both groups of farmers grew a soft, winter wheat variety (Redcoat for the Pennsylvania farmers and Yorkstar for the New York farmers) with little difference in yield potential. On both groups of farms, winter wheat was only one of several farm enterprises. The location of the farms in the study is given in Fig. 1. Note also that growing conditions for winter wheat are similar in New York and Pennsylvania. The organic farmers did not use synthetic sources of nitrogen, nor chemical means of pest and weed control. They employed a hay--corn--oats-wheat rotation and applied an average of 24.7 kg of nitrogen (from plant and
369
animal sources) per hectare. The rotation employed by the conventional farmers was similar; nitrogen use for these farmers averaged 40.4 kg (98% was synthetic nitrogen, 2% was from plant and animal sources). Soils o f the conventional farms were dominated by areas of medium and moderately fine textured soils on glacial lake or till materials, varying from the high-lime Ontario soils to the low-lime Langford soils in New York; compared to the strongly sloping, shallow soils derived from shale and sandstone typical in Pennsylvania (such as the Berks soil series). The economic and energy costs and returns o f winter wheat ~ production were analyzed for the 1974--1975 growing season. This crop year was average for the northeastern United States in terms o f weather, yields, and prices received.
l
x •
=
•
=
conventional farmers organic farmers
Fig. 1. L o c a t i o n o f c o n v e n t i o n a l a n d organic f a r m s in t h e s t u d y .
Energy costs and returns were calculated using a process analysis approach. This m e t h o d involved measuring the direct farm inputs and materials used to produce these inputs one step back from the crop hectare (see Pimentel et al., 1974, for details). A listing o f the energy costs and returns for the conventional and organic winter wheat production is given in Table I. Economic costs were calculated (Fig. 2) using a standard accounting procedure such that all cash and non-cash costs (as well as opportunity costs) were included (see Snyder, 1976, for details). However, for purposes o f com1 Analysis o f c r o p s o n a n individual basis is k n o w n as e n t e r p r i s e analysis (Castle e t al., 1 9 7 2 ) . I t c a n serve as a v a l u a b l e t o o l in d e c i s i o n m a k i n g , a n d is used b y f a r m e r s as well as policymakers.
370
TABLE I Per hectare energy inputs in wheat production I Input 2
Machinery 3 Fuel 4 Nitrogen s Phosphorus Potassium Seeds 6 Electricity7
Conventional (kcal × l 0 s ) 7.39 5.99 5.96 1.22 0.87 6.28 0.30
Organic (kcal × 105 ) 7.46 5.22 0.45 0.14 0.13 5.11 0.27
Total Inputss
28.55
19.34
Total Output 9
97.82
76.08
1 From Berardi (1977). 2 Figures are given only for growing and harvesting the crop (storage is not included). All figures in the tables represent averages. Energy inputs actually refers to the energy equivalents of the various inputs (see Leach and Sleuer, 1973, for more details). 3Information on pieces of equipment used, allocation of use to wheat, depreciation schedules, etc. was obtained from individual farmers. The machinery calculation is further explained in Pimentel et al. (1973). 4 The average fuel use for conventional farmers was 61.65 liters per hectare; the average for organic farmers was 53.68 liters per hectare. One liter of gasoline ffi 9725 kcal (Chemical Rubber Company, 1972). 5 Average nitrogen, phosphorus, and potassium use for conventional farmers was 40.40, 38.07, and 39.39 kg respectively of N, P, and K per hectare. The organic farmers used an average of 3.01, 4.47, and 5.82 kg of commercial N, P, and K per hecatre. These commercial organic fertilizers contain by-products of other industries, such as cotton hull ashes, bonemeai, cocoa meal, tobacco dust, etc. (The fertilizer energy input in Table I -- for organic farmers -- represents the marketing costs of the commercial "organic fertilizers" used by two of the farmers.) 1 kg of nitrogen ffi 4,978 keal; 1 kg of phosphorus = 3,194 kcal; l k g of potassium ffi 2,203 kcal (Leach and Sleaser, 1973). 6 Average seeding rate for conventional farmers was 152.05 kg per hectare, for organic farmers 151.71 kg per hectare. In addition to the energy contained in one gram of wheat, 25% more energy was added to account for the effort of producing, handling, transporting and packaging certified seed. For further explanation of this calculation see Pimentel et ai. (1974). For wheat production, electricity is used primarily for seed cleaners and repairs. Electricitiy requirements for wheat are given as 34.46 kilowatt hours per hectare (Cervinka et 81., 1974). The calculation is as follows: 34.46 kwh × 860 kcal per kwh ffi 29,635.6 kcal per hectare. Note that the average figure is slightly lower for the organic farmers -- one of the farmers is Amish and uses no electricity. s Energy estimates for insecticide (for conventional farmers), cover crops (for organic farmates. These inputs account for less than 3% of the total. Wheat is a crop on which little insecticides, herbicides or fungicides are used. For explanation of these calculations see Pimentel et ai. (1973). 9 Total o u t p u t = yields. The actual per hectare yields are 2961 kg for the conventional farmers and 2303 kg for the organic farmers. Wheat contains about 3300 kcal per kg
371
"(USDA, 1963). The lower yield response on the organic farms was, in part, due to their poorer soils (Berks, Volusia, Glenelg), as compared to the higher-yielding soils of the conventional group (such as Ontario, Collamer, and Langford). Athough 1975 was an average crop year, weather-wise, for both New York and Pennsylvania's wheat production, the average state wheat yield was 527 kg per hectare higher in New York than in Pennsylvania (New York usually averages between 353--703 kg per hectare higher yields than Pennsylvania).
S/he tare 400" 360.92
i:i:i:::i:::~;:: iiiiiii:i:~ii:~ ::::::::::~:;:::
300-
iiiiiiii
256.71 ....... ...... 200-
i. . . .
:
)1 116.39
:.:-.. - .-::
100"
-:.. ---:-:
Conventional farmers
Organic farmers
[] = economic
costs
[] =operating
costs
Fig. 2. Per hectare economic costs and operating costs for conventional and organic farmers.
parison, the cash "operating" costs were calculated as well (Fig. 2). These costs include all costs given in economic costs, excluding opportunity costs such as unpaid family labor (for more details, see Berardi, 1976). Data were obtained through personal interviews with the conventional and organic farmers. Yields, energy inputs, economic production costs, and labor inputs were measured in each case and then compared. RESULTS AND INTERPRETATIONS
Economic costsand returns
The average profitability (defined here as revenues minus the total economic production costs) for the conventional farmers was $ 5 9 . 5 0 per hectare (range: + $ 2 6 0 . 1 7 to - $ 1 5 3 . 4 9 ) compared to an average of $14.55 per hectare for the organic farmers (range: + $ 2 3 7 . 7 2 to - $ 2 0 0 . 1 8 ) . The lower profitability figure for the organic farmers was a reflection, in
372
large part, of higher economic production costs, $360.92 per hectare, compared to $256.71 for the conventional farmers (Fig. 2). As discussed previously, the economic costs included opportunity costs (such as unpaid family labor and a 7% interest on labor and land use). These costs do not represent actual cash costs, but income foregone by not investing in the next most profitable enterprise (whether it be another job or selling one's farm land and collecting interest on bank savings). The organic farmers (50%) lived near towns to supplement their income with off-farm employment. Their land values, then, were higher (and profitability lower, due to their location, not the means of production) since there was pressure to develop their land for urban housing and business. When only the cash operating costs were included in the calculation, the trend is reversed .... $116.39 per hectare for the organic farmers compared to $150.67 per hectare for the conventional farmers. The production cost figure for the organic farmers was lower here, since unpaid labor and interest charges on land use are not included in production costs; neither do these farmers purchase fertilizer (which is one of the main economic and energy expenses for the conventional farmers). Although the use of fertilizer was partly responsible for higher yields among the conventional farmers, several of the organic farmers compensated for their lowered yields by selling their wheat at a premium (averaging 0.04 dollars more per kilogram). This premium represents a sort of price support -- not so much for a particular crop, but for the soil -- paid by certain interested consumers for the maintenance of this natural resource. Energy costs and returns
The conventional farmers averaged 48% higher energy inputs with only 29% higher yield output than wheat produced by organic farming practices (Table I). The larger energy inputs of the conventional group were mainly due to the use of nitrogen fertilizer. It is interesting to note that three of the 10 conventional farmers used an average of 45 kg per hectare of nitrogen beyond levels suggested in "CorneU Recommends" (Cornell University, 1976), while averaging a relatively low yield, 2016 kg per hectare (range: 1882 to 2150 kg). 2 Note that the average fuel and electricity inputs were approximately the same for the organic and conventional farmers. Machinery inputs were also similar for the two groups, although the organic and conventional farmers minimized their energy (and economic) costs for this input in different ways. The conventional group had larger and newer equipment, yet they also had a larger crop area so that their per hectare fixed costs were relatively low. The organic farmers, on the other hand, used less equipment and older equipment. This equipment had already been depreciated off and thus there remained = T h e average yield in N e w Y o r k S t a t e for 1 9 7 1 - - 1 9 7 6 was 3 0 0 0 kg p e r hectare.
373
only an annual energy (and economic) repair cost. The end result o f b o t h strategies was that machinery costs were minimized. The average energy cost for seed use among the conventional farmers was 24% higher than t h a t o f the organic farmers. This higher cost was due to the purchase o f certified seed (which is more energy-intensive than home-grown seed in that there is an additional transporting and packaging cost). The organic farmers' labor inputs averaged 21 hours per hectare compared to 9 hours per hectare for the conventional farmers. The relatively high labor hours for the organic farmers were largely due to an old-order Amish farmer's inputs. 3 Exclusion o f this farmer from the calculation reduced the aver. age labor inputs of the organic farmers to 13 hou.rs per hectare.
Comparison of economic and energy costs The energy and economic cost data previously discussed are presented for comparison in Fig. 3. The economic costs were, on the average, 29% less per hectare for conventional wheat production than for organic wheat production. Note t h a t the conventional operators were farming on a wheat area averaging approximately twice the size of the organic farmers, thus certain economies o f scale (particularly for machinery use) were operating in favor of the conventional farmers. kcal x lOS/hectare 30¸
S/hectare
360.92
28.55
375
............. .'.'.'.-,-,-~-.-
256.71
20,
19.73
i!!!!!!
250
~2S
........
iiiiii!iiii Conventional farms [] :average
Organic farms
energy cost ( k c a l x l O S I h e c t a r e )
[ - ] = average economic cost (S/hectare)
Fig. 3. Economic costs vs. energy costs: the cost structure of production in comparison (from Berardi, 1977).
3Old-order Amish farmers use draft animals and human labor as their source of farm power (in the United States).
374 Frequently, agricultural production cost estimates are given only in terms of economic costs. When evaluating fossil fuel energy use in food production systems, and the environmental impact of such use, these economic cost figures are inadequate: food production systems with high economic costs may have relatively low energy costs, while the converse may also be true (Fig. 3). For the conventional farmers, those with low economic costs did not necessarily have low energy costs. These farmers operated with low overhead costs (thus their economic costs were low) with energy-intensive fertilizer and certified seed being their major cost. Alternatively, high economic production costs do not imply high energy costs. This is illustrated with the case of one of the organic growers, an Amish farmer. Although the production methods of the Amish farmer may have high economic costs, over 50% of these is an opportunity cost -- unpaid family labor (which is an arbitrary cost at best since his children are not allowed alternative employment opportunities). The Amish farmer operates on low fossil fuel resources, his major energy inputs being seed, and feed for the draft animals. DISCUSSION In this preliminary investigation of organic and conventional wheat farming practices, four aspects of production have been specifically compared: (1) economic costs; (2) economic profitability; (3) energy inputs; and (4) energy ouput (yield). The results documented that conventional fanning practices averaged 48% higher energy inputs and only 29% higher yields of wheat than organic fanning practices. It was primarily the use of nitrogen fertilizer (Table I) which resulted in the higher total energy inputs for the conventional farmers. Although it is well accepted that nitrogen fertilizer raises crop yields, it is also important to recognize that many factors affect the yield performance of a crop (soil conditions, weather, seed variety, etc.) of which fertilizer is only one. In terms of energy and economic costs, the organic farmers minimized those over which they had most control. Rather than expanding their operations for economies of scale or moving to lower-valued land, they reduced their operating costs as well as energy consumption in the following ways: (1) used older equipment (which may have higher maintenance requirements than new machinery) and less equipment (use also depends on the tilth of the soil and slope); (2) used home-grown seed (although seed germination and disease resistance might be a problem with continued home production); (3) raised some livestock as a source of manure (which may require a larger time commitment than some farmers may be able to make); (4) used green manures; (5) minimized fertilizer use (note that there may be losses in yields during the transition period, as discussed by Lockeretz et al., 1975).
375 Although the average economic costs were 29% lower per hectare for conventional production compared to organic, it is important to recognize that the organic farms were compared to the better managed conventional farms in the state. In addition, the organic farmers achieved their level of production without the aid of a considerable agricultural research and extension effort (as is available for conventional farmers). Note also that the accounting procedure one uses in tabulating the economic costs is based on many assumptions, particularly regarding opportunity costs. The way in which these costs are calculated bears directly on whether one farming practice appears more profitable than another. The conventional farmers achieved 29% higher yields per hectare, than the organic farmers, yet also mentioned was the fact that the organic farmers compensated for this by receiving a price premium. Although it is true that the premium received by several of the organic farmers was important in determining their profitability, it is not true that this is the case for all organic farmers (Lockeretz et al., 1975 and 1976). By way of conclusion, the range of values obtained in this study for economic profitability indicates the need for more research with larger samples of conventional and organic farmers, for several consecutive crop years. Further investigations of production economics and energetics of various cropping systems should include the study of larger-scale farming, careful analysis of the physical factors affecting production (soil type, weather, etc.) as well as a total o u t p u t / i n p u t analysis of all crops in the rotation. Inference about the larger population of conventional and organic farms in the northeastern United States is impossible at this point, until further research is Performed. Nevertheless, perhaps some of the methods practiced by the organic farmers should receive stronger support in research and extension. Certainly those farmers who are minimizing their fertilizer use and other fossil energy crop inputs should receive encouragement (whether it be price incentives or extension bulletins) to do so; for individual farmers' behavior is easier changed than the finiteness of fossil fuels. ACKNOWLEDGMENTS I thank the following specialists for reading an earlier draft of the manuscript and for their many helpful suggestions: William Lockeretz, Center for the Biology of Natural Systems; and, at Cornell University: Thomas Scott, Douglas LathweU, and William Parclee, Department of Agronomy; George Casler and Pierre Borgoltz, Department of Agricultural Economics; Richard McNeil and Douglas Heimbuch, Department of Natural Resources; and David Pimentel and Elinor Terhune, Department of Entomology. Any errors or omissions are the author's responsibility. This study was supported in part by the Ford Foundation (Resources and the Environment).
376 REFERENCES Anonymous, 1976. You Can Cut Farm Energy Use. Agway Cooperator, 12: 14. Berardi, G.M., 1976. Environmental Impact and Economic Viability of Alternative Methods of Wheat Production: A Study of New York and Pennsylvania Farmers. Unpublished thesis, Cornell University, Ithaca, 169 pp. Berardi, G.M., 1977. In: R. Loehr (Editor), Proceedings of the Ninth Annual Waste Management Conference on Food, Fertilizers and Agricultural Residues. Ann Arbor Science Publishers, Ann Arbor (in press). Castle, E.N., Becker, M. and Smith, F., 1972. Farm Business Management. Macmillan, New York, 340 pp. Cervinka, V., Chancellor, W.J., Coffelt, R.J., Curley, R.G. and Dobie, J.B., 1974. Energy Requirements for Agriculture in California. California Department of Food and Agriculture, Davis, 151 pp. Chemical Rubber Company, 1972. Handbook of Chemistry and Physics. Chemical Rubbar Company, Cleveland, Table D-230. Cornell University, 1976. Cornell Recommends for Field Crops. Cornell University, Ithaca, 52 pp. Ford Foundation, 1974. A Time to Choose. Ballinger Publishing Co., Cambridge, Mass., 511 pp. Leach, G. and Slesser, M., 1973. Energy Equivalents of Network Inputs to Food Producing Processes. Strathclyde University Press, Glasgow, 38~pp. Lincoln, G.A., 1973. Energy conservation. Science, 180: 155--162, Lockeretz, W., Klepper, R., Commoner, B., Gertler, M., Fast, S., O'Leary, D. and Blobaum, R., 1975. A Comparison of the Production, Economic Returns, and Energy Intensiveness of Corn Belt Farms that Do and Do not Use Inorganic Fertilizers and Pesticides. Center for the Biology of Natural Systems - AE-4, St. Louis, 62 pp. Lockeretz, W., Klepper, R., Commoner, B., Gertler, M., Fast, S. and O'Leary, D., 1976. Organic and Conventional Crop Production in the Corn Belt: a Comparison of Economic Performance and Energy Use for Selected Farms. Center for the Biology of Natural Systems - AE-7, St. Louis, 42 pp. National Academy of Sciences, 1975. Agricultural Production Efficiency. Government Printing and Publishing Office, Washington, D.C., 199 pp. Perelman, M., 1975. Natural resources and agriculture under capitalism. Am. J. Agric. Econ., 57: 701--702. Pimentel, D., Hurd, L.E., Belloti, A.C., Forster, M.J., Oka, I.N., Sholes, O.D. and Whitman, R.J., 1973. Food production and the energy crisis. Science, 182: 443--449. Pimentel, D., Lynn, W., MacReynolds, W.K., Hewes, M. and Ruch, S., 1974. Workshop on Research Methodologies for Studies of Energy, Food, Man, and the Environment Phase I. Cornell University, Ithaca, 52 pp. Shannon, M.J., 1977. Wall Street Journal 7 April 1977, p. 1. Smith, T.L., 1970. Farm labour trends in the United States, 1910--1969. Int. Labour Rev., 102: 149--169. Snyder, D., 1975. Field Crops Costs and Returns from Farm Cost Accounts. Department of Agricultural Economics, A. E. Ext. 75--26, Cornell University, Ithaca, 35 pp. Snyder, D., 1976. A Guide for Determining Field and Vegetable Crop Costs and Returns. Department of Agricultural Economics, A.E. Ext. 76--4, Cornell University, Ithaca, 16 pp. United States Department of Agriculture, 1936. Agricultural Statistics. Government Printing Office, Washington, D.C., 421 pp. United States Department of Agriculture, 1963. Handbook No. 8. Composition of Foods. Consumer and Food Economics Research Division of the United States Department of Agriculture, Washington, D.C., 189 pp. United States Department of Agriculture, 1968. Agricultural Statistics. Government Printing Office, Washington, D.C., 645 pp. United States Department of Agriculture, 1975. Yearbook of Agriculture. Government Printing Office, Washington, D.C., 362 pp.
367
© Elsevier Scientific Publishing Company, Amsterdam -- Printed in The Netherlands
ORGANIC AND CONVENTIONAL WHEAT PRODUCTION: EXAMINATION OF ENERGY AND ECONOMICS
G.M. BERARDI
Department o f Natural Resources, CorneU University, Ithaca, New York 14853 (U.S.A.) (Received 8 March 1977)
ABSTRACT Berardi, G.M., 1978. Organic and conventional wheat production: examination of energy and economics. Agro-Ecosystems, 4 : 367--376. Small~cale wheat production by conventional farming methods averaged 48% higher energy inputs and only 29% higher yields per hectare than wheat produced by organic farming methods. Process analysis was used in evaluating the direct and indirect energy requirements of both production practices. The economic costs averaged 29% less per hectare for conventional wheat production than for organic wheat production, using a standard accounting procedure.
INTRODUCTION
In the United States, the trend towards substitution of inexpensive fuel energy for expensive h u m a n muscular energy has made agriculturea significant energy consumer (National Academy of Sciences, 1975). Seventy-five percent of all inputs were purchased off the farm in 1970, compared to 2 5 % in 1910 (USDA, 1975). Besides the energy costs involved in current agriculturalmethods, concern has been directed towards the economic costs of maintaining this level of agriculture.With agriculturalsurpluses in North America commonplace, taxpayers have been supporting supply management policies,including farm subsidies and, until recently, costly storage programs (National Academy of Sciences, 1975). In addition, there has been concern among sociologistsregarding the displacement of agriculturallaborers as farm operations have become mechanized (Smith, 1970). Within the last 50 years, 5 million fossilfuel tractors have replaced 25 million draft animals (Agway Cooperator, 1976) and 9 million agricultural workers (National Academy of Sciences, 1975) in the United States alone. This trend has accelerated in recent years, with the proportion of tractors over 100 horsepower sold in the United States increasing from 2% in 1965 to 46% in 1976 (Shannon, 1977).
368 Important to note also is the increasing effort to have technology substitute for soil fertility (Perelman, 1975). Where previously manures and rotations were exclusively used, now commercial fertilizers and other technologies are employed to renew soil nutrients as well as support continuous cropping practices (USDA, 1936 and 1968). The increased use of commercial fertilizers (in the developed countries) currently faces environmental and energy constraints. In the United States energy consumption in agriculture ranked third among major industrial consumers in 1968 (National Academy of Sciences, 1975). Dependence upon foreign sources of petroleum and gas has grown (Ford Foundation, 1974) as the discovery and production of domestic energy supplies has not kept pace with demand (Lincoln, 1973). As the price of energy rises, domestic fuel supplies can be increased. Yet much of these fuels are finite and thus the energy problem must also be approached from the standpoint of energy conservation. As fossil fuel reserves diminish, research on crop production practices less vulnerable to the effects of large price increases of fossil fuel agricultural inputs will be important. Those practices which are economically viable as well as energetically frugal, would seem to be of most value if energy conservation is to be a national priority. In this article, energy production costs are determined for wheat produced by organic (low-energy) and conventional (high-energy) farming methods. Included also is an economic cost analysis, using several different accounting procedures. DATA AND METHODS Ten conventional farmers, growing winter wheat in 1974--1975, were selected from a larger listing of farmers obtained from the New York State Farm Cost Account Project. According to the project director, these farms were representative of the better managed farms in New York State (Snyder, 1975). They were commercial, full-time farm businesses. The organic farms were selected from the Rodale Press list of organic growers. Only 10 farmers qualified in 1974--1975 as commercial, organic wheat growers in New York and Pennsylvania. These 10 farms served as a comparison group in this study. Winter wheat on the organic farms averaged 7 hectares compared to 13 hectares on the conventional farms. Both groups of farmers grew a soft, winter wheat variety (Redcoat for the Pennsylvania farmers and Yorkstar for the New York farmers) with little difference in yield potential. On both groups of farms, winter wheat was only one of several farm enterprises. The location of the farms in the study is given in Fig. 1. Note also that growing conditions for winter wheat are similar in New York and Pennsylvania. The organic farmers did not use synthetic sources of nitrogen, nor chemical means of pest and weed control. They employed a hay--corn--oats-wheat rotation and applied an average of 24.7 kg of nitrogen (from plant and
369
animal sources) per hectare. The rotation employed by the conventional farmers was similar; nitrogen use for these farmers averaged 40.4 kg (98% was synthetic nitrogen, 2% was from plant and animal sources). Soils o f the conventional farms were dominated by areas of medium and moderately fine textured soils on glacial lake or till materials, varying from the high-lime Ontario soils to the low-lime Langford soils in New York; compared to the strongly sloping, shallow soils derived from shale and sandstone typical in Pennsylvania (such as the Berks soil series). The economic and energy costs and returns o f winter wheat ~ production were analyzed for the 1974--1975 growing season. This crop year was average for the northeastern United States in terms o f weather, yields, and prices received.
l
x •
=
•
=
conventional farmers organic farmers
Fig. 1. L o c a t i o n o f c o n v e n t i o n a l a n d organic f a r m s in t h e s t u d y .
Energy costs and returns were calculated using a process analysis approach. This m e t h o d involved measuring the direct farm inputs and materials used to produce these inputs one step back from the crop hectare (see Pimentel et al., 1974, for details). A listing o f the energy costs and returns for the conventional and organic winter wheat production is given in Table I. Economic costs were calculated (Fig. 2) using a standard accounting procedure such that all cash and non-cash costs (as well as opportunity costs) were included (see Snyder, 1976, for details). However, for purposes o f com1 Analysis o f c r o p s o n a n individual basis is k n o w n as e n t e r p r i s e analysis (Castle e t al., 1 9 7 2 ) . I t c a n serve as a v a l u a b l e t o o l in d e c i s i o n m a k i n g , a n d is used b y f a r m e r s as well as policymakers.
370
TABLE I Per hectare energy inputs in wheat production I Input 2
Machinery 3 Fuel 4 Nitrogen s Phosphorus Potassium Seeds 6 Electricity7
Conventional (kcal × l 0 s ) 7.39 5.99 5.96 1.22 0.87 6.28 0.30
Organic (kcal × 105 ) 7.46 5.22 0.45 0.14 0.13 5.11 0.27
Total Inputss
28.55
19.34
Total Output 9
97.82
76.08
1 From Berardi (1977). 2 Figures are given only for growing and harvesting the crop (storage is not included). All figures in the tables represent averages. Energy inputs actually refers to the energy equivalents of the various inputs (see Leach and Sleuer, 1973, for more details). 3Information on pieces of equipment used, allocation of use to wheat, depreciation schedules, etc. was obtained from individual farmers. The machinery calculation is further explained in Pimentel et al. (1973). 4 The average fuel use for conventional farmers was 61.65 liters per hectare; the average for organic farmers was 53.68 liters per hectare. One liter of gasoline ffi 9725 kcal (Chemical Rubber Company, 1972). 5 Average nitrogen, phosphorus, and potassium use for conventional farmers was 40.40, 38.07, and 39.39 kg respectively of N, P, and K per hectare. The organic farmers used an average of 3.01, 4.47, and 5.82 kg of commercial N, P, and K per hecatre. These commercial organic fertilizers contain by-products of other industries, such as cotton hull ashes, bonemeai, cocoa meal, tobacco dust, etc. (The fertilizer energy input in Table I -- for organic farmers -- represents the marketing costs of the commercial "organic fertilizers" used by two of the farmers.) 1 kg of nitrogen ffi 4,978 keal; 1 kg of phosphorus = 3,194 kcal; l k g of potassium ffi 2,203 kcal (Leach and Sleaser, 1973). 6 Average seeding rate for conventional farmers was 152.05 kg per hectare, for organic farmers 151.71 kg per hectare. In addition to the energy contained in one gram of wheat, 25% more energy was added to account for the effort of producing, handling, transporting and packaging certified seed. For further explanation of this calculation see Pimentel et ai. (1974). For wheat production, electricity is used primarily for seed cleaners and repairs. Electricitiy requirements for wheat are given as 34.46 kilowatt hours per hectare (Cervinka et 81., 1974). The calculation is as follows: 34.46 kwh × 860 kcal per kwh ffi 29,635.6 kcal per hectare. Note that the average figure is slightly lower for the organic farmers -- one of the farmers is Amish and uses no electricity. s Energy estimates for insecticide (for conventional farmers), cover crops (for organic farmates. These inputs account for less than 3% of the total. Wheat is a crop on which little insecticides, herbicides or fungicides are used. For explanation of these calculations see Pimentel et ai. (1973). 9 Total o u t p u t = yields. The actual per hectare yields are 2961 kg for the conventional farmers and 2303 kg for the organic farmers. Wheat contains about 3300 kcal per kg
371
"(USDA, 1963). The lower yield response on the organic farms was, in part, due to their poorer soils (Berks, Volusia, Glenelg), as compared to the higher-yielding soils of the conventional group (such as Ontario, Collamer, and Langford). Athough 1975 was an average crop year, weather-wise, for both New York and Pennsylvania's wheat production, the average state wheat yield was 527 kg per hectare higher in New York than in Pennsylvania (New York usually averages between 353--703 kg per hectare higher yields than Pennsylvania).
S/he tare 400" 360.92
i:i:i:::i:::~;:: iiiiiii:i:~ii:~ ::::::::::~:;:::
300-
iiiiiiii
256.71 ....... ...... 200-
i. . . .
:
)1 116.39
:.:-.. - .-::
100"
-:.. ---:-:
Conventional farmers
Organic farmers
[] = economic
costs
[] =operating
costs
Fig. 2. Per hectare economic costs and operating costs for conventional and organic farmers.
parison, the cash "operating" costs were calculated as well (Fig. 2). These costs include all costs given in economic costs, excluding opportunity costs such as unpaid family labor (for more details, see Berardi, 1976). Data were obtained through personal interviews with the conventional and organic farmers. Yields, energy inputs, economic production costs, and labor inputs were measured in each case and then compared. RESULTS AND INTERPRETATIONS
Economic costsand returns
The average profitability (defined here as revenues minus the total economic production costs) for the conventional farmers was $ 5 9 . 5 0 per hectare (range: + $ 2 6 0 . 1 7 to - $ 1 5 3 . 4 9 ) compared to an average of $14.55 per hectare for the organic farmers (range: + $ 2 3 7 . 7 2 to - $ 2 0 0 . 1 8 ) . The lower profitability figure for the organic farmers was a reflection, in
372
large part, of higher economic production costs, $360.92 per hectare, compared to $256.71 for the conventional farmers (Fig. 2). As discussed previously, the economic costs included opportunity costs (such as unpaid family labor and a 7% interest on labor and land use). These costs do not represent actual cash costs, but income foregone by not investing in the next most profitable enterprise (whether it be another job or selling one's farm land and collecting interest on bank savings). The organic farmers (50%) lived near towns to supplement their income with off-farm employment. Their land values, then, were higher (and profitability lower, due to their location, not the means of production) since there was pressure to develop their land for urban housing and business. When only the cash operating costs were included in the calculation, the trend is reversed .... $116.39 per hectare for the organic farmers compared to $150.67 per hectare for the conventional farmers. The production cost figure for the organic farmers was lower here, since unpaid labor and interest charges on land use are not included in production costs; neither do these farmers purchase fertilizer (which is one of the main economic and energy expenses for the conventional farmers). Although the use of fertilizer was partly responsible for higher yields among the conventional farmers, several of the organic farmers compensated for their lowered yields by selling their wheat at a premium (averaging 0.04 dollars more per kilogram). This premium represents a sort of price support -- not so much for a particular crop, but for the soil -- paid by certain interested consumers for the maintenance of this natural resource. Energy costs and returns
The conventional farmers averaged 48% higher energy inputs with only 29% higher yield output than wheat produced by organic farming practices (Table I). The larger energy inputs of the conventional group were mainly due to the use of nitrogen fertilizer. It is interesting to note that three of the 10 conventional farmers used an average of 45 kg per hectare of nitrogen beyond levels suggested in "CorneU Recommends" (Cornell University, 1976), while averaging a relatively low yield, 2016 kg per hectare (range: 1882 to 2150 kg). 2 Note that the average fuel and electricity inputs were approximately the same for the organic and conventional farmers. Machinery inputs were also similar for the two groups, although the organic and conventional farmers minimized their energy (and economic) costs for this input in different ways. The conventional group had larger and newer equipment, yet they also had a larger crop area so that their per hectare fixed costs were relatively low. The organic farmers, on the other hand, used less equipment and older equipment. This equipment had already been depreciated off and thus there remained = T h e average yield in N e w Y o r k S t a t e for 1 9 7 1 - - 1 9 7 6 was 3 0 0 0 kg p e r hectare.
373
only an annual energy (and economic) repair cost. The end result o f b o t h strategies was that machinery costs were minimized. The average energy cost for seed use among the conventional farmers was 24% higher than t h a t o f the organic farmers. This higher cost was due to the purchase o f certified seed (which is more energy-intensive than home-grown seed in that there is an additional transporting and packaging cost). The organic farmers' labor inputs averaged 21 hours per hectare compared to 9 hours per hectare for the conventional farmers. The relatively high labor hours for the organic farmers were largely due to an old-order Amish farmer's inputs. 3 Exclusion o f this farmer from the calculation reduced the aver. age labor inputs of the organic farmers to 13 hou.rs per hectare.
Comparison of economic and energy costs The energy and economic cost data previously discussed are presented for comparison in Fig. 3. The economic costs were, on the average, 29% less per hectare for conventional wheat production than for organic wheat production. Note t h a t the conventional operators were farming on a wheat area averaging approximately twice the size of the organic farmers, thus certain economies o f scale (particularly for machinery use) were operating in favor of the conventional farmers. kcal x lOS/hectare 30¸
S/hectare
360.92
28.55
375
............. .'.'.'.-,-,-~-.-
256.71
20,
19.73
i!!!!!!
250
~2S
........
iiiiii!iiii Conventional farms [] :average
Organic farms
energy cost ( k c a l x l O S I h e c t a r e )
[ - ] = average economic cost (S/hectare)
Fig. 3. Economic costs vs. energy costs: the cost structure of production in comparison (from Berardi, 1977).
3Old-order Amish farmers use draft animals and human labor as their source of farm power (in the United States).
374 Frequently, agricultural production cost estimates are given only in terms of economic costs. When evaluating fossil fuel energy use in food production systems, and the environmental impact of such use, these economic cost figures are inadequate: food production systems with high economic costs may have relatively low energy costs, while the converse may also be true (Fig. 3). For the conventional farmers, those with low economic costs did not necessarily have low energy costs. These farmers operated with low overhead costs (thus their economic costs were low) with energy-intensive fertilizer and certified seed being their major cost. Alternatively, high economic production costs do not imply high energy costs. This is illustrated with the case of one of the organic growers, an Amish farmer. Although the production methods of the Amish farmer may have high economic costs, over 50% of these is an opportunity cost -- unpaid family labor (which is an arbitrary cost at best since his children are not allowed alternative employment opportunities). The Amish farmer operates on low fossil fuel resources, his major energy inputs being seed, and feed for the draft animals. DISCUSSION In this preliminary investigation of organic and conventional wheat farming practices, four aspects of production have been specifically compared: (1) economic costs; (2) economic profitability; (3) energy inputs; and (4) energy ouput (yield). The results documented that conventional fanning practices averaged 48% higher energy inputs and only 29% higher yields of wheat than organic fanning practices. It was primarily the use of nitrogen fertilizer (Table I) which resulted in the higher total energy inputs for the conventional farmers. Although it is well accepted that nitrogen fertilizer raises crop yields, it is also important to recognize that many factors affect the yield performance of a crop (soil conditions, weather, seed variety, etc.) of which fertilizer is only one. In terms of energy and economic costs, the organic farmers minimized those over which they had most control. Rather than expanding their operations for economies of scale or moving to lower-valued land, they reduced their operating costs as well as energy consumption in the following ways: (1) used older equipment (which may have higher maintenance requirements than new machinery) and less equipment (use also depends on the tilth of the soil and slope); (2) used home-grown seed (although seed germination and disease resistance might be a problem with continued home production); (3) raised some livestock as a source of manure (which may require a larger time commitment than some farmers may be able to make); (4) used green manures; (5) minimized fertilizer use (note that there may be losses in yields during the transition period, as discussed by Lockeretz et al., 1975).
375 Although the average economic costs were 29% lower per hectare for conventional production compared to organic, it is important to recognize that the organic farms were compared to the better managed conventional farms in the state. In addition, the organic farmers achieved their level of production without the aid of a considerable agricultural research and extension effort (as is available for conventional farmers). Note also that the accounting procedure one uses in tabulating the economic costs is based on many assumptions, particularly regarding opportunity costs. The way in which these costs are calculated bears directly on whether one farming practice appears more profitable than another. The conventional farmers achieved 29% higher yields per hectare, than the organic farmers, yet also mentioned was the fact that the organic farmers compensated for this by receiving a price premium. Although it is true that the premium received by several of the organic farmers was important in determining their profitability, it is not true that this is the case for all organic farmers (Lockeretz et al., 1975 and 1976). By way of conclusion, the range of values obtained in this study for economic profitability indicates the need for more research with larger samples of conventional and organic farmers, for several consecutive crop years. Further investigations of production economics and energetics of various cropping systems should include the study of larger-scale farming, careful analysis of the physical factors affecting production (soil type, weather, etc.) as well as a total o u t p u t / i n p u t analysis of all crops in the rotation. Inference about the larger population of conventional and organic farms in the northeastern United States is impossible at this point, until further research is Performed. Nevertheless, perhaps some of the methods practiced by the organic farmers should receive stronger support in research and extension. Certainly those farmers who are minimizing their fertilizer use and other fossil energy crop inputs should receive encouragement (whether it be price incentives or extension bulletins) to do so; for individual farmers' behavior is easier changed than the finiteness of fossil fuels. ACKNOWLEDGMENTS I thank the following specialists for reading an earlier draft of the manuscript and for their many helpful suggestions: William Lockeretz, Center for the Biology of Natural Systems; and, at Cornell University: Thomas Scott, Douglas LathweU, and William Parclee, Department of Agronomy; George Casler and Pierre Borgoltz, Department of Agricultural Economics; Richard McNeil and Douglas Heimbuch, Department of Natural Resources; and David Pimentel and Elinor Terhune, Department of Entomology. Any errors or omissions are the author's responsibility. This study was supported in part by the Ford Foundation (Resources and the Environment).
376 REFERENCES Anonymous, 1976. You Can Cut Farm Energy Use. Agway Cooperator, 12: 14. Berardi, G.M., 1976. Environmental Impact and Economic Viability of Alternative Methods of Wheat Production: A Study of New York and Pennsylvania Farmers. Unpublished thesis, Cornell University, Ithaca, 169 pp. Berardi, G.M., 1977. In: R. Loehr (Editor), Proceedings of the Ninth Annual Waste Management Conference on Food, Fertilizers and Agricultural Residues. Ann Arbor Science Publishers, Ann Arbor (in press). Castle, E.N., Becker, M. and Smith, F., 1972. Farm Business Management. Macmillan, New York, 340 pp. Cervinka, V., Chancellor, W.J., Coffelt, R.J., Curley, R.G. and Dobie, J.B., 1974. Energy Requirements for Agriculture in California. California Department of Food and Agriculture, Davis, 151 pp. Chemical Rubber Company, 1972. Handbook of Chemistry and Physics. Chemical Rubbar Company, Cleveland, Table D-230. Cornell University, 1976. Cornell Recommends for Field Crops. Cornell University, Ithaca, 52 pp. Ford Foundation, 1974. A Time to Choose. Ballinger Publishing Co., Cambridge, Mass., 511 pp. Leach, G. and Slesser, M., 1973. Energy Equivalents of Network Inputs to Food Producing Processes. Strathclyde University Press, Glasgow, 38~pp. Lincoln, G.A., 1973. Energy conservation. Science, 180: 155--162, Lockeretz, W., Klepper, R., Commoner, B., Gertler, M., Fast, S., O'Leary, D. and Blobaum, R., 1975. A Comparison of the Production, Economic Returns, and Energy Intensiveness of Corn Belt Farms that Do and Do not Use Inorganic Fertilizers and Pesticides. Center for the Biology of Natural Systems - AE-4, St. Louis, 62 pp. Lockeretz, W., Klepper, R., Commoner, B., Gertler, M., Fast, S. and O'Leary, D., 1976. Organic and Conventional Crop Production in the Corn Belt: a Comparison of Economic Performance and Energy Use for Selected Farms. Center for the Biology of Natural Systems - AE-7, St. Louis, 42 pp. National Academy of Sciences, 1975. Agricultural Production Efficiency. Government Printing and Publishing Office, Washington, D.C., 199 pp. Perelman, M., 1975. Natural resources and agriculture under capitalism. Am. J. Agric. Econ., 57: 701--702. Pimentel, D., Hurd, L.E., Belloti, A.C., Forster, M.J., Oka, I.N., Sholes, O.D. and Whitman, R.J., 1973. Food production and the energy crisis. Science, 182: 443--449. Pimentel, D., Lynn, W., MacReynolds, W.K., Hewes, M. and Ruch, S., 1974. Workshop on Research Methodologies for Studies of Energy, Food, Man, and the Environment Phase I. Cornell University, Ithaca, 52 pp. Shannon, M.J., 1977. Wall Street Journal 7 April 1977, p. 1. Smith, T.L., 1970. Farm labour trends in the United States, 1910--1969. Int. Labour Rev., 102: 149--169. Snyder, D., 1975. Field Crops Costs and Returns from Farm Cost Accounts. Department of Agricultural Economics, A. E. Ext. 75--26, Cornell University, Ithaca, 35 pp. Snyder, D., 1976. A Guide for Determining Field and Vegetable Crop Costs and Returns. Department of Agricultural Economics, A.E. Ext. 76--4, Cornell University, Ithaca, 16 pp. United States Department of Agriculture, 1936. Agricultural Statistics. Government Printing Office, Washington, D.C., 421 pp. United States Department of Agriculture, 1963. Handbook No. 8. Composition of Foods. Consumer and Food Economics Research Division of the United States Department of Agriculture, Washington, D.C., 189 pp. United States Department of Agriculture, 1968. Agricultural Statistics. Government Printing Office, Washington, D.C., 645 pp. United States Department of Agriculture, 1975. Yearbook of Agriculture. Government Printing Office, Washington, D.C., 362 pp.