By Tom Karst / June 02, 2016
Organic farming has a startling positive effect on local economies — so much that the author of a study on the subject said “it almost seems too good to be true.”
In a report produced for the Washington, D.C.-based Organic Trade Association called “U.S. Organic Hotspots and their Benefit to Local Economies,” Penn State agricultural economist Edward Jaenicke found that so called “organic hotspots” — at least two counties with high levels of organic agricultural activity compared to their neighbors — experienced a $2,000 increase in median incomes and a 1.3% decline in poverty levels.
Jaenicke said June 1 that he was not paid for the research by the OTA — it was project he began independently several years ago — but was approached by the organization to help publicize his findings after he made a presentation about his preliminary results.
The complete research paper on the benefits of organic hotspots is undergoing peer review by an academic journal, he said. Jaenicke said he has received about $21,000 from the OTA to help him conduct a pending study on global trade in organic products.
He said the organic hotspots study appeared to be the first of its kind, measuring the effect of organic activity on local economies on a nation-wide basis.
The research shows that organic activity gave a greater boost to the economy than general agriculture activity, according to a news release. Organic activity also reduces poverty more than some anti-poverty programs, according to the release.
The paper identified 225 counties in the U.S. as “organic hotspots” and then considered how that activity — crop production, livestock production, organic processing — influenced median income and poverty rates. Examples of organic hotspots include Monterey County in California, Huron County in Michigan, Clayton County in Iowa, and Carroll County in Maryland, according to the release.
Jaenicke said that he used data from 2009 on organic activity and correlated that information with economic indicators from 2012 and 2013.
He said counties were identified as “hotspots” on a relative and local basis. For example, he said while California’s Marin County had much more organic activity than a county in Iowa or northern Pennsylvania, all three counties were organic hotspots relative to nearby counties.
Counties with high levels of conventional agriculture activity didn’t show the same correlation to higher household income, he said.
“We didn’t find anywhere near the same level of benefit for (general agriculture) activity,” he said. “I don’t think the change to economic indicators was statistically significant (for general agriculture).”
Jaenicke said that he created economical models to measure organic activity against other variables such as economic indicators, education levels, real estate prices and other county characteristics. But he said the correlation linking organic activity with higher median income and lower poverty rate was strong, even accounting for counties that were otherwise similar.
“The only real difference between the counties on a statistical level is the organic hotspot and that’s the only thing that is different about them,” he said. “We can assign extra economic benefit to that hotspot.”
The increase in median household income of $2,000 was higher than he anticipated, Jaenicke said.
“It is higher than I expected and it almost seems too good to be true,” he said.
He noted that the number of U.S. counties identified as hotspots were relatively small, so the effect on the whole nation was relatively small.
“In a way, I wish it wasn’t quite such a large number, it is an eye-opener and almost too big to believe in some ways,’ he said. “It is what it is.”
Jaenicke said he hopes other researchers try to replicate or update his findings.
He said his study didn’t answer the question of why organic hotspots raise median income and reduced poverty, but he said some have proposed several theories.
One theory, he said, is that organic agriculture might use more local labor than general agriculture and thus create more opportunity for workers. He said other researchers suggest that organic agriculture’s shorter supply chain results in more buying and selling of organic products locally.
Another idea is that organic agriculture simply provides a greater level of value-added production. Finally, some researchers speculate that organic hotspots are where there are high levels of other creative economic endeavors, such as high technology or the arts.
Jaenicke said he has no immediate plans for follow-up research.
The research points to five policy recommendations for lawmakers, according to the release:
Promote organic agriculture at all levels of government;
Invest in rural development, organic transition and removing barriers to investment;
Boost outreach efforts;
Target specific areas for organic development; and
Create broad coalitions to promote organic agriculture.
