An Economic Evaluation of the Sustainable Agriculture Farming Systems Project (SAFS) at the University of California Davis

Karen Klonsky

The Sustainable Agriculture Farming Systems (SAFS) research project began in 1989 to study conventional, low input and organic farming systems for crop rotations typical to the Sacramento Valley of California. The project includes a two-year conventional system (processing tomatoes and wheat) and four-year, five-crop rotations for conventional, low input and organic systems (tomatoes, safflower, corn, and a double crop of a winter grain and dry beans). The gross income, production costs, and net returns are estimated for each of the crops and each of the systems and on a whole farm basis to compare the economic viability and profitability of the systems. The income and net returns for the organic crops are calculated two ways; first using conventional price, and secondly with the prevailing premium price for organic commodities. Organic price premiums exist for all of the crops grown in the SAFS project although the size of the premiums has changed over time and fluctuates from year to year. From 1989 to 1999, processing tomatoes have averaged a 54% price premium above the conventional price, beans 41%, corn 29% and safflower 28%.

Processing tomatoes account for about 60% of the gross income for the four-year rotations and over 90% for the conventional two-year rotation. As expected, the two-year rotation with tomatoes every other year showed the highest gross income when organic price premiums are ignored. However, including premiums, the organic system showed the highest gross income in seven of the eleven years and every year but one since 1992 when transplants began to be used instead of direct seeding for low input and organic tomatoes.

Fertility management in the alternative systems has been more expensive than for the conventional systems because of the cost of the cover crops. In addition, the use of manure, kelp and fish emulsion on tomatoes and manure on corn have been sizeable expenses. The move to transplanted tomatoes in 1992 added about $300 per acre in costs to the alternative systems, but allowed the cover crop to grow for a longer period of time and thus increased nitrogen and biomass and reduced weed pressure and hand hoeing costs.

The whole farm performance of each system measured as average net income per acre reveals that the organic system relied on organic premium prices to remain economically viable. Without price premiums, the organic system showed an average net loss. With organic price premiums, the organic system showed the highest net income of all the four-year systems in eight out of ten years and exceeded the two-year conventional system in 4 years. On average, the low input system outperformed the organic system with conventional prices but fell below the two conventional systems.

The results of this study show the physical potential to reduce synthetic fertilizer and chemical inputs to agriculture and maintain yields. However, the economic cost of doing so differs dramatically from one crop to another. In particular, the use of organic fertilizers such as kelp and fish emulsion may not be economically justified without organic premiums. Similarly, hand hoeing is only tenable for high value crops.

Comparing the performance of the low input system to the conventional four-year system after the three-year transition period, tomato yields were similar, safflower lower and corn and bean yields higher than the conventional four-year rotation. The costs of production were similar or lower for all crops except tomatoes, resulting in the low input system being more expensive and less profitable overall than the conventional four-year system. These results point to the difficulty in generalizing about the relative profitability of sustainable farming practices and the need to conduct research on a crop-by-crop and location-by-location basis. It follows that some crops can more easily be converted to sustainable and organic production practices than others can.

Karen Klonsky
Dept. of Agricultural and Resource Economics
2150 Sciences and Humanities Bldg.
University of California Davis, CA 95616
Tel: (530) 752-3563
Klonsky@Primal.Ucdavis.edu

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