True Cost Analysis for Agriculture

Project category: 
Research & Development

Soil & More International BV has conducted a study for the Agricultural Department of the former Egyptian National Competitiveness Council to compare the economic feasibility of Egypt’s seven key commodities (Wheat, Rice, Sugar Beet, Sugar Cane, Potatoes, Corn and Cotton), grown applying both organic and conventional farming practices. The task was to internalize the so called “externalities”, achieving a true cost analysis for the period 2011 to 2020. The summary can be downloaded at the end of this page.

Although the definition of externalities quite often includes various, assumption based aspects, in this study they were limited to tangible parameters such as soil leakage, rising energy and with it fertilizer prices, water and irrigation costs, decreasing subsidies and a potential but very low carbon tax.

The soil structure and water holding capacity as well as cation exchange capacity obviously played an important role in the modelling as it affects the efficiency of the fertilizers and nutrients and related application rates.
The result was clear. At the latest, within the next 10-15 years the assessed organically produced crops will have lower production costs per ton than products cultivated using business as usual conventional practices. Organic practices make more efficient use of the natural resources, especially soil and with it indirectly carbon, energy and water and therefore have an economic competitive advantage.

The objective of this project is to use the results from the study carried out in Egypt, to further develop the underlying algorithms and economic models of the current methodology regarding fertilizer and nutrient efficiency in deteriorating soils and secondly, to generalize and standardize the methodology in order to meet also non-Egyptian circumstances and thirdly, to make the methodology available as an easy to use input/output tool for companies and organizations.

The deliverable of this project will be an easy to use software tool to assess the future economic feasibility of a production system taking into consideration above mentioned tangible externalities. The software tool is linked to the Cool Farm Tool to create maximum synergies with already collected data.