AgriFood-Report 2012:1

Public consumption of organic food products - targets as instruments

In 2005 the Swedish government declared that 25 % of all public food consumption should consist of organic certified food products by the end of 2010. The aim with the target was to realise goals in Swedish organic agriculture production.

This report shows that consumption of organic food is associated with substantial costs and the most important cost is the higher price for organic food stuff. It is calculated that the price premium for “organic” in public consumption on average cost is about 65 % although the price premium varies substantial across food categories. The price premium for “organic” for dairy products, the most important organic food category, is for example more modest 20-30 %.

The fact that the price premium for “organic” varies considerably across products implies that costs increase exponentially for achieving higher shares of organic food. Compared to if no organic food would have been purchased, the share of a little more than 12 % in 2010 increases the costs by approximately 200 million SEK while the goal of 25 % would increase the costs by about 500 million SEK or almost 7 % of public expenditure on food purchases.

Our study, as many other studies, support that instruments of production are more efficient means than public purchases to realise goals in production. The environmental support for organic production has the virtue of being directly provided to farmers. Payments to farmers can therefore better target areas and agricultural practices than goals for public food consumption which depends on supply elasticities in the chain of production and not at least if the agricultural input can be produced in Sweden.

The report is in Swedish with an english summary.

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