Looking at The Market for Climate-Friendly Food

Written by Cecilia Stuart

There is a wealth of research that explores the diverse environmental benefits of organic agriculture. Many farmers may want to experiment with practices that carry environmental benefits, but are concerned about potential profit losses or unforeseen consequences. Farms are ultimately businesses, and businesses cannot survive without turning a profit. It’s not that farmers do not care about their land: these farms are often home, heritage and legacy for farmers and their families, but maintaining a profitable business model is essential for ensuring their longevity. It’s here that many farmers hesitate when considering more environmentally sustainable farming practices, for fear that they could result in lower yields and smaller profits. Read on to learn how organic agriculture can be just as profitable as, or even more profitable than, conventional agriculture.

In Canada, the organic market has undergone a transformation in recent years. While organic food was once primarily viewed as a niche market for a narrow consumer base, the sector has seen a dynamic shift and growth over the last several years. Organic purchasing demographics have broadened across genders, generations, income and education levels as more shoppers search for food with a smaller environmental footprint, fewer chemical inputs and an absence of GMOs.

These trends have continued over the past year, both in Canada and Ontario. Twenty-three percent of Canadians are buying more organic groceries now than they were a year ago. This represents a major opportunity for Canada’s agricultural producers to tap into a growing market with a hungry consumer base. Today we’ll take a closer look at trends in Canada’s (and specifically Ontario’s) organic sector and explore how farmers can reap the rewards of this exciting transformation.

Why the Growing Interest in Organics?

Canada’s agrifood sector is a pillar of our economy, generating about $139 billion of Canada’s GDP in 2020.Historically, the organic sector has made up a small fraction of that—but this is beginning to change. Canadian spending on organics is up almost 15 percent since 2017, growing to over $8.1 billion.

Ontario has the largest organic market of all the provinces, with a wide range of consumers who purchase organic products on a regular basis. Whereas the national average for weekly organic purchasing is 64 percent of shoppers, Ontario sits higher at 71 percent. Ontario shoppers spend the highest percentage of their grocery budget on organics than any other province—24 percent versus a national average of 22 percent. 

Many of the reasons for consumers’ preference for organic relate to health and environmental benefits. Organic products are seen by Ontario shoppers as being more environmentally friendly and free of harmful ingredients. When surveyed, the top five motivations Ontario shoppers identified for purchasing organic were:

• To avoid highly processed foods and artificial ingredients
• To avoid harmful pesticides or other chemicals
• To support a healthier environment
• To avoid genetically modified products
• To support thriving farms in rural communities

There is growing awareness of—and appreciation for—the principles that drive organic agriculture: health, ecology, fairness and care. When asked about the factors that influence their organic purchasing, Ontarians identified recommendations from friends, family and health professionals, value for money and recommendations from mainstream and social media. As consumer interest grows, shoppers are taking advantage of the wide range of organic products available across distribution channels—from chain grocery stores to farmers markets and CSAs.

How Can Farmers Cash in?

Due to the growing appetite for organic products in Ontario (and across the country), domestic supply is unable to keep up with demand. There is far more organic consumption than production in Canada, and this is especially true of Ontario versus other provinces and territories. Despite having a larger agri-food sector than Quebec, the number of organic operators in Ontario is just over half of Quebec’s. National trade data shows that Ontario has the highest organic import figures per capita, while exports from Ontario only account for 5.2 percent of the national total. Ontario farmers have a unique opportunity to scale up organic production to meet demand both domestically and abroad—meaning bigger profits and a larger consumer base.

Data from 2016 projects that the Canadian organic sector could account for more than 10 percent of total retail sales by 2028. In order to reap the benefits of this demand, Ontario needs more organic crop producers, livestock producers and processors alike. In 2015, the Quebec government announced a commitment to supporting organic farmers with a robust portfolio of resources. In addition to other measures, the government pays farmers who convert land from conventional to organic. The success of this initiative, and the sector growth it has generated, demonstrate that Ontario could follow Quebec’s lead.

Organic management practices, with their focus on strengthening soil health and on-farm biodiversity, ensure that farms are sustainable over the long-term and that their soils can keep growing strong crops for years to come, despite the rise in severe weather that climate change has caused. Organic products sell for a higher price than their conventionally farmed counterparts, and market data shows that consumers are willing to pay: on average, Canadians spend $184 per week on organic groceries, making Canada’s organic market the sixth largest in the world. 

With consumer demand and imports increasing, Canada’s organic sector has room to grow—and it is, but recent data shows that Ontario is lagging behind. While Quebec’s organic sector grew by 11.9 percent in 2020 to over 2,500 organic operators, Ontario saw only 5.2 percent growth to 926—despite the fact that Ontario’s agrifood sector is larger than Quebec’s.
The nation-wide growing demand for organic is good news for Ontario farmers who wish to increase their farms’ resilience in the face of severe weather, grow their profits and tap into an underserved consumer base, all while helping to mitigate further climate impacts. There is a great deal of potential in organic production, but making the switch can be intimidating without proper supports. What is the true cost of organic farming, and what kinds of resources are available to farmers who wish to begin their transition journey?

What’s The Cost of Organic Farming?

Organic production—and other climate-friendly management practices—are often thought of as less profitable than conventional farming, but that doesn’t have to be the case. With proper management, organic farming can be more profitable than conventional after an initial transition period. In fact, an ongoing, decades-long study by the Rodale Institute has shown that organic systems can earn three to six times more profits than their conventional counterparts after a five-year transition period. During the first transition years, farmers can expect steep learning curves as they gain experience with environmentally friendly farming techniques and work to rebuild their farm’s soil health—which can often result in an initial dip in profits. 

To reduce or eliminate barriers to transitioning there are a number of financial supports available to Ontario farmers. One of these is the Canadian Organic Trade Association’s Organic Conversion Support Program, which reimburses farmers for costs incurred while transitioning to organic farming. Similarly, an Ontario Soil and Crop Improvement Association program provides funding to farmers in the Lake Erie or Lake St. Clair watersheds who implement management practices related to improving soil health, while the Regenerative Organic Alliance’s Farmer Cost-Share Program offers financial support to farmers and handlers who have applied to be regenerative organic certified.

Organic farming uses less energy, fewer inputs and leads to healthier soils that perform better than degraded soils in times of drought or other seasonal challenges. Healthy soils are more efficient at nutrient cycling, plant stabilization, preventing erosion, supporting biodiversity and much more—all of which makes for a more resilient farm that can continue to net yields in challenging conditions and unpredictable weather. Healthier soils require less frequent watering, are less prone to erosion and produce fewer weeds, which can save time, money and labour spent on weeding and watering.

Because of its focus on sustainability, organic farming encourages the circular use of resources—meaning outputs from one area (e.g. grain, manure) are used as inputs for another (e.g. feed, fertilizer). This can help save money and safeguard a farm from rising supply costs. Management practices like no-till or rotational grazing also reduce energy consumption significantly, which results in energy savings and fewer carbon emissions.

It’s also important to consider the invisible costs associated with environmentally destructive farming practices—including environmental, community and health impacts like the rise in glyphosate-resistant weeds and pests, water and air pollution, soil erosion and high carbon emissions. Degraded and eroding soils are already posing significant challenges for farmers and this problem is only expected to worsen, posing a major risk to the long-term viability of many farms. A 2020 study calculated those costs using Minnesota Corn as a case study, concluding that conventional farming is less profitable when considerations for environmental and health costs are accounted for (dropping from $600/acre to $260/acre in 2017 dollars). These costs are long-term and felt by every member of society.

How To Start The Transition To Organic Farming

You don’t need to completely overhaul your farm system to experiment with climate-friendly farming practices like crop rotation, cover cropping and more—we break down the basics of some of these practices in our blog post on building biodiversity through organic and regenerative practices. Many fully certified organic farmers start by experimenting with sustainable practices on small plots of their land before scaling up. Others will experiment with techniques based on their business goals or problems on their farm they’d like to address. 

Eventually, those who wish to farm organically should develop an organic plan that outlines all aspects of the farm system, including crop rotations; anticipated weed, pest and disease problems and solutions; equipment and inputs; and plans for tillage, harvest, handling and marketing. This plan is mandatory for those who want to become certified organic. Common organic management practices include low- or no-till, cover cropping, intercropping and rotational grazing. To learn about the training programs available to Ontario farmers looking to transition to organic, visit our website.

Farms that adhere to the Canadian Organic Standards (COS) can become certified organic. Organic certification is an important system that ensures the integrity of organically farmed products. Certified producers must register with one of Canada’s certifying bodies, which includes submitting an organic farm plan and passing an inspection. The transition process leading up to certification usually takes three years. Once you’re certified, you’re eligible to use the Canada Organic logo to tap into premium pricing and broaden your reach to the organic consumer base. You can find a detailed step-by-step guide on becoming certified organic in Ontario here.

To learn more about the ins and outs of organic farming, including the environmental and economic benefits, check out the rest of our Organic Climate Solutions campaign.

Take Action

This article just scratches the service of the benefits of organic farming and its potential to boost profits for Ontario farmers. To learn more about the environmental and economic benefits of climate-friendly farming, check out our Organic Climate Solutions campaign and get access to research, resources, testimonies and more.

If you want to gain exclusive access to the kind of Ontario-specific organic sector data found in this article, you can purchase our 2021 Ontario Organic Market Report.

This knowledge article is part of our Organic Climate Solutions campaign. Check out OCO’s Organic Climate Solutions campaign, funded in part by the Government of Canada, to learn more about how farmers can reduce the environmental impact of agriculture and be part of the climate solution.