Organic production cuts poverty rates, boosts median household income, OTA research shows

“Since the 1980s … there has been a notion about the role that organic plays in rural development and economic impact,”​ but until now the socioeconomic impact of organic agriculture on local economies has not been rigorously quantified, said Laura Batcha, CEO and executive director of OTA, which commissioned the study: US Organic Hotspots and their Benefit to Local Economies​. 

She explained that bringing to the table a detailed overview of three research papers that scrutinize the economic impact of organic production, the white paper shows policy makers at the state and federal levels that organic agriculture can be used as an economic development tool, and therefore should be further developed and encouraged.

The research, conducted by Edward Jaenicke, an associated professor of agricultural economics at Penn State University, identified 225 counties in the US that qualify as “organic hotspots”​ – or counties with a high concentration of organic operations that are surrounded by other counties that have a high concentration of organic operations.

Lower poverty rates, high household incomes in organic ag areas​

These hotspots standout compared to areas without significant organic operations in that on average their poverty rates are 1.3 percentage points lower than the average poverty rate of 16%. They also have median household incomes that are on average $2,000 higher, according to the research.

These results also are comparable to major anti-poverty programs, including the Supplemental Nutrition Assistant Program (SNAP), which was responsible for a 1.5 percentage point reduction in the overall poverty rate, according to US Census data from 2014 cited in the white paper. Likewise, the Special Supplemental Nutrition Program of Women, Infants and Children was responsible for a 0.1 percentage point decrease in the poverty rate, according to the research.

A closer look at the decline in the poverty rate and increase in the household income of organic hotspots reveals differences between organic handling hotspots and organic product hotspots. Specifically, organic handling hotspots saw an average household income increase of $2,588 compared to organic production hotspots that saw an increase of $1,089. The poverty rate in organic production hotspots, however, declined more than that of organic handling hotspots at 1.2% compared to 1.07%, according to the study.

What’s more, organic hotspots also had lower unemployment rates and higher county-level per capital income, according to the white paper. It found “membership in an organic hotspot of any type lowers the unemployment rate by 0.22 percentage points,”​ whereas membership in a general agriculture hotspot saw unemployment actually rise 0.06 percentage points.

Similarly, organic hotspots had an increase in per capital income of about $899 compared to general agriculture hotspots which had per capital income that was $1,076 lower than average, the report found.

By comparing organic hotspot agriculture economic indicators to those of general agriculture hotspots is significant in that it shows the beneficial impacts attributed to organic hotspots are not due to the nature of agriculture in general, and suggests that organic agriculture specifically should be encouraged.

What drives organic hotspot formation​

Notably the location of organic hotspots does not align with general agriculture hotspots, suggesting that growing conditions and other agriculture related factors are not the only factors that contribute to the formation of these areas and their economic benefits, according to the paper.

Rather, the report found counties were 12.8% more likely to be organic hotspots if at least 50% of organic operations in a county are certified by companies with a separate, non-profit arm that provides education and outreach about organic production.

In addition, the odds that a county would be an organic hotspot increased 6.6% when at least 50% of organic operations in a county were certified by certifiers with a public sector home, such as a state agency, the report notes.

Policy take-aways​

Given the demonstrable economic benefits of organic agriculture and production at the county-level, the report recommends policy makers at all levels encourage organic development through enhanced loan and grant programs, entrepreneur assistance and community development.

It also recommends creating programs that support organic transition, such as enabling farmers who are transitioning to organic to charge some type of premium for their crops during the three years in which they use organic practices but are not yet fully certified.

The paper also recommends that policy makers target development efforts towards counties that already have high organic production levels, but which are not surrounded by neighboring counties with similar focus.

Finally, the white paper suggests the research findings could help reinforce bipartisan support for organic as it relates to anti-hunger and poverty-fighting efforts.