According to their website, it's both grown and processed organically. That would certainly increase the production cost. It would also reduce the chemical exposure of workers at all points in the process.
http://www.birchfabrics.com/help_answer.asp?ID=20#250
If I was making a gift for my sister, who is very socially and environmentally conscious, I would certainly consider buying this fabric. It's expensive, but it would show that I respect her beliefs. It's not for everyone, but it's nice to have the option available. Thanks for bringing this manufacturer to my attention!