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Economic performance of organic farming in Germany under changed agricultural policy framework Conditions
Project
Project code: TI-BW-08-PID1432
Contract period: 01.01.2001
- 31.12.2016
Purpose of research: Applied research
The development of organic farming is heavily influenced by the general agricultural policy framework, which are continously changed. What are the impacts of the recent reforms on the organic sector? In addition to the increasing demand for organic products, the expansion of organic farming has been favoured by a number of policy instruments since 2001. Within the existing bouquet of policy measures, the most important are area based payments in the framework of agri environment programs. Despite the relatively favourable market conditions and government support in Germany, the politically set goal of a share of 20 percent organic area has not yet been achieved. Whether a significantly larger number of farms will be converted to organic farming in the future as until now depends, among other things, on the specific organic area payments and the general agricultural policy framework conditions. In light of the continuously changing support policy, the Institute uses quantitative models and written surveys to analyse the income effects of agricultural policy reforms and assesses the efficiency of alternative support policies.
Model based projections for the year 2023 in the framework of the Thünen Baseline show that organic farms increase their profits as a consequence of an expansion of production and assumed yield increases despite largely sinking producer prices. At the same time the organic farms profit from a slight increase in direct payments. The positive income effects are, however, overshadowed by increasing farm input prices. In the projection for the year 2023, the organic farms thus achieve a somewhat lower average farm income per labour unit in contrast to the base year period (2009/10 to 2011/12). The analysis shows that organic farms can essentially profit from the CAP reform (in particular from the shift of funding from the first to the second pillar). The income impacts of the reform are, however, limited for organic farms in the medium-term.
Section overview
Subjects
- Business administration
- Organic Farming
