The profitability of organic soybeanproduction

Results from long-term experimental trials suggest that similar yields and lower costs are possible with organic compared toconventional soybeans, but there is little information about the relative costs and returns of these systems on commercialfarms. This study examines the profitability of commercial soybean production using a nationwide survey of soybeanproducers for 2006 that includes a targeted sample of organic growers. Treatment-effect models are specified to characterizeadopters of the organic approach and to isolate the impact of organic choice on operating, operating and capital, and totaleconomic costs of soybean production. Organic soybean producers tend to be younger, have less crop acreage, and are lesslikely to work off-farm than conventional producers. Organic soybean production costs range from about $1 to $6 per bushelhigher than those for conventional soybeans due to both lower yields and higher per-acre costs, while the average organicprice premium in 2006 was more than $9 per bushel. Long-term cropping systems data suggest significant returns to organicsystems result from similar yields and lower costs than conventional systems, but the high returns to commercial organicproduction found in this study can only be attributed to the significant price premiums paid for organic soybeans. Averageorganic soybean price premiums have remained high since 2006 despite much higher conventional soybean prices as usersof organic soybeans attempt to retain and attract more acreage. However, increases in conventional soybean prices and fuelprices reduce the incentive for planting organic soybeans by improving returns to conventional production and increasingthe relative costs of organic production