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Organic Agriculture: Ethical Standarts Come at a Premium Price
Grocery shopping is a mundane activity. However, the reason why we choose one product over another is one of the most complex decisions in economics.
This choice represents a combination of personal preferences, consumption, and demand. The myriad of brands available for a broad number of goods can turn a task as simple as selecting morning cereals into a challenge. Yet, in the last few years there is a product that has entered the European markets in triumph, backed up by generous EU subsidies to the producers and by the general public sympathy. It is known as organic agriculture and its sales in Europe were almost €14 billion in 2005, with an annual growth between 10-15%.
According to Organic Farming, organic agriculture is the production of food from agricultural processes that respect nature and animal welfare and create new opportunities for rural producers.
Organic farming must also respect strict regulations and inspections in and outside the European Union and place emphasis on the use of natural resources over artificial substances. An example of the use of natural resources are specific bacteria, plant extracts or sulphur that help control any possible plague without the use of conventional chemical matter. The European Union sets very strict limits on chemical synthetic pesticides and synthetic fertiliser use, livestock antibiotics, food additives and processing aids, amid the absolute prohibition of the use of genetically modified organisms.
Despite the growth of organic food in Europe, there is one factor that prevents the consumer from buying: the price. Organic agriculture can be between 10% to a 100% more expensive. Understandably, the frugality of consumers during periods of economical decline may punish this type of agriculture. On the other hand, scandals such as the mad cow disease can push consumers into considering alternatives types of food products.
There are substantial differences among European countries when it comes to spending on organic agriculture. In terms of average consumer spending, Denmark ranks first from the EU countries, with more than €60 per head. Next in line is Sweden, with €45, Austria with €41 and Germany with €40. Regarding organic agricultural land and wild collection areas, Finland’s eight million hectares are followed by Spain’s 1.6m hectares.
While in Spain 90,2% are aware what organic food means, in the UK this percentage decreases to 59%. Organic agriculture cannot succeed without informed consumers. In an effort to harmonise the organic food standards within the European Union and minimise consumer’s confusion, the European Council of Agricultural Ministers agreed to a new regulation on organic production and labelling. The new regulation went into effect on 1 January 2009 but the provision on labelling will not take effect until 1 July 2010.
The importance of organic agriculture also shows substantial differences among the European countries. According to the 2004 report ‘European consumer’s conceptions of organic food’ one of the causes of such differences are the sales channels for organic food. Over 70% of organic food is sold through general food shops in Austria, Denmark, Finland, Sweden, Switzerland and the UK. However, in countries such as Italy or Spain organic goods are connected with small-scale distribution. On the other hand, in Hungary as well as in other Central-Eastern European countries, the availability of organic food in mainstream distribution is almost zero.
This statistic introduces a curious contradiction. On the one hand, organic agriculture can only benefit and grow if it gains access to main stream distribution channels (such as supermarkets). On the other, the very essence of organic farming goes against this mass consumption network. How this conundrum is resolved will determine the direction of organic farming for the future.
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