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To be truly sustainable, a farm must be economically viable. The environmental and social benefits of sustainable production methods do not always translate into immediate economic gains. That said, sustainable agriculture practices can have a positive economic impact on a farm. For example, diversifying the farm with several crops and markets helps to reduce financial risk. Over time, improved soil and water quality, as well as other environmental benefits from sustainable practices, may raise the value of the farm. Selling products directly to local markets in the community reduces shipping and fuel costs and can potentially decrease transportation costs. While sustainably grown produce may not bring the full price premiums sometimes paid for certified organic products, growers selling directly to individuals and specialty markets can still capture added value.
Production costs can be variously affected by sustainable methods. Fertilizer and pesticide costs are generally reduced on a sustainably managed farm because, for example, legumes and crop rotations tend to be less expensive than their synthetic alternatives. Labor costs are often higher than conventional systems. The higher labor costs are most often attributed to the increased time required for monitoring and managing pests on sustainable farms. Planting material costs can be lower for growers saving their own seed or producing their own stock.
However, those using organic planting material often pay more for seed or other planting material. Machinery costs (purchase, fuel, and repairs) will vary depending on the specific type of sustainable production system. Conservation tillage systems and reduced pesticide applications can cut costs related to machinery use and fuel costs. On the other hand, certain systems, such as ridge tillage, can require specialized equipment. Fuel and machinery costs can increase as a result of moving bulky materials, such as organic matter, for soil improvement purposes.
The result is that some farms that utilize sustainable agriculture practices may be more profitable than their conventional farming counterparts, although the reverse can also be true. In addition to crop production methods, many other factors can affect the bottom line, including management, marketing skills, and experience.
Lists the following indicators that a farm is achieving economic sustainability
• The family savings or net worth is consistently going up.
• The family debt is consistently going down.
• The farm enterprise is consistently profitable from year to year.
• Purchase of off-farm feed and fertilizer is decreasing.
• Reliance on government payments is decreasing