True Cost Study SEKEM

Organic Farming Worth it: Comparative Study on the true costs of Organic and Conventional Food Production

The recently published study “The Future of Agriculture in Egypt” deals with the question of whether conventional or Organic farming is more expensive in Egypt. The objective of the research was to draw a comprehensive cost comparison between conventional and Organic agriculture methods that also consider the impacts on the environment, for which the country sooner or later has to pay. The research was conducted by the “Carbon Footprint Center” of Heliopolis University for Sustainable Development in cooperation with SEKEM and builds on “The 100% Organic Egypt Study”, which was already published in 2011.

Despite knowing that Organic farming has a positive impact on the environment, conventional farming is still applied in most parts of Egypt. Only one per-cent of the total agricultural area is Organic certified. Among others, this is linked to the widespread belief that Organic farming is more expensive. But this is not true – especially in the long run. “The Future of Agriculture in Egypt” proves the opposite.

Full Cost Accounting

The comparison was conducted by analyzing the economic costs of five national strategic crops in Egypt’s agriculture (cotton, corn, potatoes, rice and wheat), by using the “Full Cost Accounting” methodology and data provided by the FAO (Food and Agriculture Organization of the United Nations). Full cost accounting measures and values (in monetary terms) the external costs of environmental impacts of food wastage. This means that not only factors such as raw materials, certification, human resources and machines are considered, but also the prices that arise through the pollution of soil, air or water.

The research concludes that although Organic agriculture has a slightly higher direct input cost of production, it enables a reduction of the environmental and health damage costs, and therefore, results in better cost effectiveness and profitability in the long-term for society as a whole. The costs for all five conventional cultivated crops are higher than for the Organic cultivation. For some products the net benefit of conventional agricultural products is even lower than the one for Organic crops. This means that if companies would need to bear the costs for environmental pollution or health damage they would even make losses applying conventional agriculture.

True Cost Study SEKEM_2
True cost comparison of conventional and Organic cultivated crops.

Currently, through high energy subsidies and no generic water prices, the unsustainable practices are supported and the market is distorted, because there is no fair distribution of the true costs occurring in agricultural production. However, the Egyptian Government seems to create more awareness on the problems of conventional agriculture and starts to foster sustainable farming. This is becoming more and more urgent for a country like Egypt that suffers from a general scarcity of natural resources, such as fertile land or water. At the moment the environment and future generations, which are both pillars of the Egyptian economy, will pay the price for conventional agriculture.

Nils Daun


Read the full study "The future of Agriculture in Egypt"
Impact Evaluation Study on SEKEMs contracted farmers