Agriculture Reference
In-Depth Information
In the dairy study in Australia, biodynamic farms showed a considerably lower net return
over the three years surveyed than their conventionally farming neighbours, though their
returns were similar compared with all farmers of the area (Wynen 2000). These results were
achieved with no or low premium prices for the biodynamic milk. To reach similar returns to
those of their conventional neighbours, the biodynamic farmers would have needed a premium
price of about A$0.10 per litre of milk, a premium not considered extravagant in some other
countries. The study in Canada (Stonehouse
et al.
2001) showed a 12% lower net income per
hectare on organic farms, though the return was 1 percentage point higher for the organic
farms as returns on total assets. The USA study showed 16% lower net income per litre of milk
produced (Butler 2002).
Conclusion for established farms
Looking at the different studies over time on the comparability of organic and conventional
management systems, the results of the net returns and their components of yield and total
production, input costs and output prices are variable. In some studies net returns were found
to be lower, and in others similar or higher. The question of comparative profitability is
unlikely to be answered definitively, as the results depend on many factors, only some of which
are within the farmer's control. The management of the farm and decisions about which crop
to grow where, or even which enterprise to include, are somewhat under the farmers' control.
Climate and soil type, input and output prices, premiums and subsidies depend on the partic-
ular country and time in which the farmer lives, with policies changing over time. Perhaps, the
inclination of the organic movement to minimise comparisons of the system in the 1980s was
reasonable, especially if they were carried out to convince the conventional sector that invest-
ment in this system was warranted, rather than to find where the change in management
system impacted most, and how to make the system work better.
In the debate about whether it is financially rewarding to farm organically, the question of
what to include in the final analysis remains. The private benefits to the farmer are included.
From society's point of view, another relevant factor is the difference in off-farm effects
between the two management systems. This is notoriously difficult to quantify but is still
relevant for the full picture of the total efficiency of the systems. In some of the studies dis-
cussed, this factor is already included in the form of subsidies and premium prices, though
these extra revenues must also cover the extra cost of small-scale marketing.
So, the answer is not clear cut. The studies discussed here indicate that the results can be
positive for organic farmers, but do not necessarily need to be so. When considering conver-
sion, the farmer would be wise to take several factors into consideration, including the physical
attributes of the farm and the farmer, marketing possibilities and the political climate in the
country at that time.
Conersion challenges
Whether a farmer can become an established organic farmer and not go bankrupt in the
process depends on several factors. Important in this connection is the capacity of the farmer
to adapt to a different way of management, and the ability to consider availability of farm
resources on the history of the fields, market possibilities and political climate. This last issue
involves government support in the form of, for example, production subsidies and research
funding or reducing hurdles through regulations that hinder organic production and market-
ing. Lampkin and Padel (1994) devoted several chapters to the effect of conversion in several
countries, and quote several early studies. In Australia, the process of conversion in the cereal-
livestock industry was analysed by Wynen (1992).
