Industrial farming relies on fertilizers made from fossil fuels. These fertilizes are used to replace nutrients in the soil. Organic farming, however, improves soil fertility through crop rotations, and is therefore less affected by oil prices.
With oil predicted to reach $200 a barrel within five to 10 years, the profit margin on organic wheat, barley and oil seed rape could soon be significantly higher than for the same crops produced by non-organic methods.
If there ever was a silver lining to an otherwise unfortunate financial situation, this might be it.
This study, created for the British Soil Association, suggests that as oil will inevitably become scarcer and prices rise, local and international economic forces will increasingly begin to favor organic farming over conventional farming.
How the Economic Forces of Energy, Fertilizers and Food Converge, Opening the Door for Local, Organic Farming
The price of chemical fertilizers –which are made from fossil fuels – increased by more than 200 percent, worldwide, in 2007. Average prices paid by U.S. farmers reached record levels last month at 113 percent higher than the average price in August 2007, according to another brand new report by The Fertilizer Institute.
However, rising oil prices may not be the only factor that could fuel a return to more local, sustainable and organic farming practices.
According to both the Fertilizer Institute, and the International Center for Soil Fertility and Agricultural Development (IFDC), the increased demand for alternative energy – ethanol -- is a major contributing factor to the rapid rise in fertilizer prices as well.
So the cost of energy sources, period, appears to be a potent force in driving fertilizer prices skyward, which in turn increases cost of conventionally-grown food.
2007 saw industrial farmers applying higher levels of fertilizers in an effort to maximize their corn production for ethanol, as grain for biofuel were at the highest prices ever. From January 2007 to January 2008 the price of one metric ton of corn rose from $3.05 to $4.28 per bushel. “Those forces drive fertilizer prices higher,” said Dr. Balu Bumb, leader of the Policy, Trade, and Markets Program of IFDC.
The rising price of fertilizers contributes to a positive feedback loop for grain prices, creating an upward-spiraling effect of ever rising fertilizer- and food prices. Add to that skyrocketing oil prices and the increasing demand for biofuels and you have a financial-agricultural loop that can only be described as unsustainable.
As it turns out, our current “green” worldview has created brand new financial ramifications.
"There was once a food economy and an energy economy—but the boom in biofuels is now merging the two," said Phil Humphres, IFDC Senior Specialist-Engineering.
While 70 percent of corn production has traditionally been used as animal feed, the U.S. used 18 to 20 percent of the 2007 corn crop for ethanol, which increased corn prices by 70 percent. And the situation will likely get worse this year as 25 percent of corn production is earmarked for ethanol.
It’s this convergence of food prices and energy prices that is boosting fertilizer prices, which effectively creates a never-ending circle. The smartest way out would be to return to an agricultural system that does not depend on chemical fertilizers, nor requires expensive transportation from farm to consumer.
Enter the local, organic farm.
Demand for Organic Food is Increasing Across the World
I’ve reported about the increased demand for organics in the U.S. on multiple occasions, but health conscious Americans are certainly not alone in beginning to favor locally-grown organic foods. For example, sale of organic food in Ireland has increased by 82 percent just in the last two years, and Turkey saw a stunning 500 percent increase in accredited organic producers in just one four-year period.
Many European countries are also trying to expand public awareness of “food miles,” i.e. the number of miles your food has traveled from producer to your table.
The benefits of eating organic foods, and sticking with local sources whenever possible, are numerous. From better taste, to more nutrition, to a cleaner environment, to… MORE money left in your pocket?
The way things are going, that could soon be the case.