- 1.4.1 Reduction in Environmental Pollution (negative externalities)
- 1.4.2 Food Safety
- 1.4.3 Soil Erosion, Structure and Fertility
- 1.4.4 Animal Welfare
- 1.4.5 Maintenance of Rural Communities and Employment
- 1.4.6 Biodiversity
- 1.4.7 Conclusion
1.4 A Review of the Environmental/Public Good Costs and Benefits of Organic Farming and an Assessment of How Far These Can be Incorporated into Marketable Benefits
Organic production is seen to have a number of private benefits which are measured through the market. However, a major argument for public intervention in this sector is that it also has a number of public good benefits. Such public good benefits are perceived to include reduction in pollution, "food safety", soil erosion, biodiversity, animal welfare, and the maintenance of rural communities and employment.
It must be emphasised that this section is a brief review of the literature concentrating upon organic farms and comparing these with conventional farms. It is not possible here to review all the literature on public good or bad impacts of agriculture.
1.4.1 Reduction in Environmental Pollution (negative externalities)
Environmental pollution caused by agricultural chemicals has been the subject of a number of studies. It has been argued that a decreased use of pesticides could help reduce run-off of agricultural chemicals in some areas and reduce the spread of chemical residues in the environment, Evans et al., (1992) Watts and MacFarlane (1997). Organic farmers avoid or restrict the use of commercial fertilisers and instead rely more on recycling of nutrients in their farming operations which reduces the opportunity for residual nutrients in soil which might be subject to leaching (USDA, 1980).
Hallberg (in; Reeve, 1990), reviewed a number of groundwater studies in the United States and found a near linear relationship between applied fertiliser nitrogen and nitrate concentrations in shallow groundwater. These overseas experience led MacIntyre to suggest that, given our levels of pesticide use, we should anticipate future problems from pollution including groundwater contamination (MacIntyre et al., 1989).
Pesticide use can have substantial environmental benefits such as reducing erosion by poisoning of rabbits, conservation of native flora by controlling opossums, control of weeds in and around national parks and reserves through herbicide use, as well as energy and soil conservation through the adoption of minimum tillage practices using herbicides (MacIntyre et al., 1989). Research into the environmental costs from pesticide use in New Zealand is limited (MacIntyre et al., 1989).
MacIntyre et al., (1989) reported that there are general indications that domestic food/ environment contamination is occurring. Furthermore, he recommended that environmental monitoring with which to correct existing problems and make future policy adjustments is needed.
In addition to the above there are concerns about spray drift and public health especially in rural communities, both domestically and internationally. This has become more important with the growth of lifestyle blocks. However, little evidence exists in NZ as to the extent of this problem.
1.4.2 Food Safety
Numerous studies, as discussed elsewhere in the report, show that one of the main motives for the purchase of organic food is either the belief that it was intrinsically "healthier" than conventional food or through fear of pesticide and chemical residues, (Sachs et al., 1987; McGuirk et al., 1990; Tregear et al., 1993; Smailwood, 1989; Kramer, 1990; van Ravenswaay, 1990; Lamb, 1991, 1993; James, 1993). Some studies as reported in Bourn (1994) have found increased concentrations of vitamin C and minerals with lower nitrate levels in organic compared to conventionally produced food. However, other studies showing the composition of organic food to be very similar to that of conventional (Brookes, 1993; McGregor and Blackholly, 1990).
There is also debate as to whether the chemical residues present in conventional produce pose a health threat (e.g. Schaub, 1991; Woodham, 1991). The Food and Drug Administration's residue surveillance monitoring programme, which showed that two-thirds of the food tested had no pesticide residues and that less than one percent were over established tolerances for pesticides, do not seem to be dispelling consumer concerns (Wilson-Salt, 1994).
There is still scepticism regarding food safety, with MacIntyre et al., (1989) arguing that the Department of Health's calculations on human exposure to pesticides are a charade and its poorly-designed food monitoring efforts offer false assurances of consumer "safety". The argument that New Zealand's stringent export residue monitoring program guarantees a diet of low-residue food is also questioned by their study.
A MAF (1994) study found that none of the residue levels recorded in their study of pesticide residues in selected fruit, cereal and cereal products available on the domestic market, were likely to have any adverse effects on human health based on the toxicological assessment of the intake levels of the pesticides concerned.
Richardson et al. found in their study of New Zealand public perceptions of the relative risks and benefits of a variety of fruit production methods including genetic engineering, use of chemical fertilisers, chemical pesticides, organic farming and irradiation, that respondents perceived organic farming to have the highest benefits and lowest risk, and henceforth, was the most acceptable of the techniques tested (Richardson et al., 1997).
1.4.3 Soil Erosion, Structure and Fertility
In their analysis of some of the environmental impacts of organic agriculture, Manhire and Soper (1993) suggested that Organic farmers aim to minimise adverse effects of farming on soil and vegetation resources and on the environment in general, through adopting enterprises and management techniques appropriate to the particular topography, soil and climate types.
The Association of Soil Erosion and Agriculture in United States and in Australia, argue that soil erosion still remains a serious threat to agricultural sustainability despite substantial public and private investment in conservation measures (Reeve, 1990). A study by the USDA agued that practices used extensively by organic farmers, including meadow-based rotations, cover crops, green manure crops, non-inversion-type tillage, and organic matter management, all help to control soil erosion (USDA 1980).
In the Reganold et al., (1993) study of soil quality, results showed that the biodynamic farms had better soil quality than the neighbouring conventional farms. In six of the seven farm sets the biodynamically farmed soils had better structure and broke down more readily to a good seedbed than did the conventionally farmed soils. Predominantly, the biodynamic farms provided better aeration and drainage for crop or grass growth compared with the blocky and clod structures found mostly on the conventional farms. Furthermore, soil structure, the recycling rate of vital nutrients, biological activity, and formation of topsoil, were all present in a greater level in biodynamic farms over conventional farms.
1.4.4 Animal Welfare
Most organic certification schemes include regulation that animal welfare is paramount. Lampkin and Padel (1994) argue that one of the key characteristics of organic farming is the extensive management of livestock, paying full regard to their evolutionary adaptions, behavioural needs and animal welfare issues with respect to nutrition, housing, health, breeding and rearing.
Lampkin (1990) argues that livestock husbandry on organic farms depends on three major principles. These include: systems in which animals are kept must conform to the highest welfare standards; animals must be fed in a way suited to their physiology, using food largely produced on the farm; veterinary treatment should always avoid routine prophylactic drug use. Livestock health should be maintained through good preventive husbandry, animal welfare and appropriate housing and feeding systems.
Many different nutritional problems occur in farm animals, but few if any of these seem to be uniquely related to the use of inorganic fertilisers or organic amendments on soil (USDA, 1980). Low levels of selenium in soils may result in healthy looking forage but may cause a selenium deficiency in an animal that consumes it. Animals also require sodium, cobalt, and iodine, which forage plants do not, and this can result in nutritional problems in animals eating material from essentially healthy plants (USDA, 1980).
Organic farming systems aim to keep livestock healthy, however the attainment of this aim has often been questioned by some people (Reinken and Buchner 1987). However, MAF (1994) suggests that to minimise disease outbreaks and provide for animal welfare, programmes for the use of acceptable remedies need to be developed to substitute for the recommended chemical interventions. Upon request, MAF veterinary authorities will assist certifying organisations with standards development. In addition, all producers are bound by the Animals Protection Act to use remedies when necessary to protect animal health.
1.4.5 Maintenance of Rural Communities and Employment
The technological change in farming practice, especially over the last four decades, and the rise in relative off farm incomes and employment opportunities has resulted in a displacement of farm labour causing serious social costs (Reeve, 1990), that is, the dissolving of rural communities and employment.
MAF (1994) agues that one of organic farming's potential contributions to the sustainability of New Zealand agriculture is it=s ability to maintain or enhance the social and cultural wellbeing of people and communities. Organic farms, when run effectively, generally provide similar or slightly lower financial returns than conventional farms. However, taking into account external costs and benefits indicates that sometimes organic farming can provide better net returns to society than conventional agriculture (MAF, 1994).
The increase in the average size of farms and the decrease in labour use have a broad impact on society, with the whole fabric of rural life being radically altered (Oelhaf, 1978). For example, in the United States, a downward regional multiplier effect has resulted in a depopulation of rural areas as businesses and other support industries closed down due to the out migration of farmers and farm workers (Oelhaf, 1978). Oelhaf (1978) argued that the investment loss and the human suffering are not included in the lower food prices; neither are the loss of cultural values.
Bateman (1993) argued that an important benefit of organic farming is the creation of jobs in the rural economy. He concluded that although organic farming involves a reduction in inputs and hence input-output-related employment, this is more than offset by the increases in on-farm employment and in processing activities.
Furthermore, Midmore (1993) argued that conversion to organic farming does have the potential to generate considerably wider social and economic impacts than simply on the farms involved. This argument was supported by studies that researched the impact of a substantial change in agricultural systems to organic methods. These studies included, Lampkin et al.'s (1987) examination of the local effects of a pilot organic conversion scheme in the Teifi Valley, Wales; Jenkins and Midmore's (1992) investigation into the comparative implications of a proposed scheme to aid conversion to organic agriculture; and Murphy's (1992) detailed survey of the financial performance of organic farming.
Padel (1994) found that the number of full-time workers used per 100 ha was in the long-term about ten per cent higher than on conventional farms. This percentage was even higher during the initial conversion from conventional to organic farming.
Studies investigating employment and income on individual farms have conflicting results. Zerger and Padel (1993) suggest that the number of farms and the numbers employed in agriculture will continue to decline, but at a slower rate if an ecological approach that is low input farming and organic farming was adopted. Braun (1990) suggests that farm incomes would fall significantly, assuming no premium prices and maintenance of the existing number of farms and distribution by size and type.
However, as many organic farms supplying the domestic market have to develop their own marketing channel, and process the product, this may mean more local employment in rural areas, as well as potential for eco-tourism.
1.4.6 Biodiversity
Another perceived public benefit from organic agriculture is that it can lead to greater biological diversity in agricultural systems and in wildlife habitats. This is generally greater in the mixed livestock and arable system used by many organic farms (which take advantage of the beneficial relationships between animals, plants, soil and climate). This enables farmers to maintain many of the cyclical processes characteristic of natural ecosystems (Evans et al., 1992).
However, there is also an argument that biological diversity is greater in a wide range of crops and animals. Various studies show there is a greater abundance and diversity of wildlife in organically managed arable crops than in conventional ones (Ingrisch, Wasner and Gluck, 1989; Wolf-Straub, 1987; Zwingel, 1987; Frieben, 1988; Ries, 1988; Plakolm, 1989; Elsen, 1989).
Undersowing of crops (such as a grass/cover mix undersown in cereals) is an important feature of many agriculture systems. In Europe, this is more common on organic farms. This practice has been shown to support a higher diversity of insect species and to minimise nutrient leaching. The effect of undersowing can spread beyond the edges of the field in question (Vickermann, 1978), resulting in significant increases in the variety of insects over the whole farm. These together with the more varied habitats that result from a mixed rotation, are likely to encourage bird populations on organic farms (Evans et al., 1992).
In Denmark, a comparison of conventional and organic farms by the Ministry of the Environment revealed significantly higher numbers of birds on organic farms (Braae, 1988).
1.4.7 Conclusion
Organic farming may provide important public good benefits. However, perception of these are important and may reflect imperfect information in the market. Benefits such as food safety are difficult to assess but in any case these should be reflected via the market in the price premium for organic produce and as such are essentially private goods. However, organic production can have negative impacts due to extra cultivation.
Organic agriculture can reduce the level of negative externalities (pollution) from agriculture. Whether this is seen as private or public benefits depends upon the initial specification of property rights. If producers have the right to pollute with little if any restrictions or penalties, then organic farming will have important public good benefits. However, if producers do not have the right to pollute then the reduction on pollution from farming is a private benefit with farmers not having to find other methods of reducing pollution. In general in agriculture it is the former which is the case and therefore, organic farming can be seen to have public benefits which imply some form of encouragement/ recognition and in other countries is one of the reasons for subsidies.
Any positive effects of organic farming on soil erosion, structure and fertility has both public and private benefits: public benefits in that soil erosion affects other members in society whereas improved soil structure and fertility are of benefit to the producer and reflected in their cost/benefits.
Animal welfare considerations are also seen as public benefits but some of this is reflected in the premium consumers are willing to pay, for example free range eggs.
An important argument for the subsiding of organic farming particularly in the EU is its public good benefits in maintaining rural communities and employment. However, it must be remembered that whilst organic production has potential benefits the relatively small area means these are not large in total.
However, studies on the public good benefits and costs of organic farming are few. Whilst there are many studies on public good benefit and costs of conventional farming, they do not necessarily allow comparisons with organic methods and more explicit studies are needed.
Contact for Enquiries
Kay Brown
Sector Performance Policy
MAF Policy
Ministry of Agriculture and Forestry
PO Box 2526
Wellington
NEW ZEALAND
Phone: +64 4 894 0695
Fax: +64 4 4 894 0746
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