Agriculture Reference
In-Depth Information
up by Lockeretz and Madden (1987). Several other surveys were published, such as in the United
Kingdom (UK) by Murphy (1975) and Vine and Bateman (1981). In the early 1990s, Lampkin
and Padel (1994) pulled together, in an edited volume, studies in many countries (from Europe,
USA, Canada, Australia) and analysed many aspects of organic agriculture. Topics encompassed
physical (yield, production) and financial (input costs, output prices, total farm receipts) varia-
bles of both established farms and those in conversion. This survey also included modelling
widespread conversion to organic farming in different countries. Since then, other studies have
been published that consider the differences between the two systems in some or all of those
concepts, such as Penfold
et al.
(1995), Smolik
et al
. (1995), Reganold (1995), Wynen (1998),
Clark
et al
. (1999), Offermann and Nieberg (2000), Wynen (2000), Stonehouse
et al.
(2001),
Butler (2002), Pacini
et al.
(2002), Mäder
et al.
(2002), Nieberg and Offermann (2003), Delate
et
al.
(2003), and Smith
et al.
(2004). Nicholas
et al
. (2004) provide an overview of studies carried
out in the organic dairy industry. As many different combinations of profitability to different
factors (e.g. land, labour) were analysed in Lampkin and Padel (1994), the studies carried out
since then have served to highlight prevalent aspects in particular industries, under certain
climatic and soil conditions, in particular geographical areas and within a particular policy
framework. In some of the later studies particular topics (apart from financial returns) such as
measures of sustainability and energy efficiency have received more emphasis.
No attempt is made here to write an exhaustive treatise of the economics of organic agri-
culture. Rather, the aim is to highlight key issues affecting returns to management in organic
agriculture, often comparing them with returns to management on a conventional farm. Pro-
duction, input costs, output prices, premiums and subsidies are discussed to arrive at the farm
profitability on established organic farms.
Production and productivity
Productivity is production related to inputs. Productivity is often equated with production
(e.g. tonnes of grain, head of cattle) per unit of land (hectare), but productivity could also be
measured as output per unit of labour, energy or water used, or investment. Many assume that
agricultural production per hectare under organic management is lower than under conven-
tional management. Although this is often the case, it is not necessarily so. There are some
general rules that can be observed.
Yield changes (changes of production per hectare or animal) are often relative to the inten-
siveness of the enterprise before conversion. This is true within enterprises (e.g. changes on
intensively farmed cereals are larger than on extensively farmed cereals after converting to
organic management) and between enterprises. For example, changes in yields in intensively
run horticultural enterprises may be different from those in intensive cereal-livestock farming
after conversion. In countries with a relatively high percentage of agriculture in extensive
industries, such as dairy farming as compared with crops only, more farmers tend to convert
to organic agriculture (e.g. in Austria and Switzerland), possibly ref lecting the ease of conver-
sion within this industry compared with other industries.
As the intensity of agriculture in a certain industry, say cereal-livestock, differs between
countries, figures for changes in yield due to a change in management system also differ
between countries. For example, reductions in crop yields after conversion were up to 40% in
some European countries such as the UK, Germany, Denmark and the Netherlands in the
1990s, while those in Australia, Canada and the USA were between 10% and 20% down and
were, in some cases, even higher than those under conventional farming (Lampkin and Padel
1994, p. 202). Mäder
et al
. (2002) mentioned yield decreases of 20% to be normal in organic
systems in Switzerland, and Nieberg and Offerman (2002) found typical grain yield decreases
of between 30% and 40% in several European countries.
