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Price of organics justified

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A recent Suncorp Bank study shows an average of 79% difference in price between organic and conventional produce. Consumers are reminded that when they buy organic food they are paying the real costs of real food.

According to Dr Andrew Monk from Australian Organic (formerly Biological Farmers of Australia ), there are many reasons for this difference but like many food supply chains, just a fraction of the retail price is passed onto farmers.

Andrew explains that organic food is generally not mass produced unlike larger conventional ones, often giving them different economies of scale. Most organic farms are small and family owned, and rely on more rural labour for managing pests, diseases and weeds, resulting in organic produce often costing more to produce and distribute.

Organic reflects a fair price for farmers who are caring for the environment while producing foods that a growing band of consumers want: foods produced without synthetic chemicals, GMOs, or synthetic weedicides. However, unsustainably low conventional food pricing can be unfair to these organic farmers.

Nature’s Haven farms 160 hectares of certified organic fruit and vegetables in New South Wales and Queensland. The company’s Don Murray says the price difference can be partly attributed to the difference in economies of scale.

For instance, conventional farmers sell produce by the truckload whereas organic farmers sell produce by the pallet load. Costs of production are higher because organic farmers don’t use synthetic chemicals to grow crops, instead using manual labour to tackle pests and weeds, leading to 30-40% higher labour costs compared to conventional farms.

Even harvesting is done manually using labour and wheelbarrows instead of a tractor with a boom as it is cheaper on smaller quantities. 

Nature’s Haven says they also incur extra certification costs because they are certified organic and are required to abide by rigid guidelines.

Nutritionist Shane Heaton observes that contrary to the popular assumption that household income is the main determinant of demand for organic food, organic consumers come from all walks of life and all levels of the socio-economic spectrum.

Pointing out that the average Australian household spends more on junk food than fruit and vegetables, more on fast food and takeaway than fruit and vegetables, more on alcohol than fruit and vegetables and more on recreation than fruit and vegetables, he says consequently, Australians are spending more on medical expenses than they do on fruit and vegetables.

The Australian Organic Market Report 2012 shows price remains the main barrier to Australians buying more organic produce; however, IBISWorld research predicts organics is one of Australia’s top five growth industries in 2013.

Organics is now worth $1.27 billion dollars to Australia, which suggests consumers are willing to pay the price for real food that is free of synthetic chemicals and additives, is farmed with environment-friendly practices and treats animals humanely.

Consumers can be confident that they are getting what they are paying for if the product has the Bud or any other organic certification logo.

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