The role of subsidies in beef cattle farms in SW Spain: a comparison of organic and extensive farms

Summary

Livestock farming systems of the Spanish rangelands (dehesas) are traditional systems characteristic of the Iberian Peninsula where native herbaceous vegetation and evergreen species of Quercus provide the foundation for extensive beef farming enterprises. Dehesas are considered to be the most extensive, diverse, and low-intensity land use systems in Europe. Nevertheless, in the last twenty years, the Common Agricultural Policy (CAP) has produced some important effects in these systems, specially an increase of the stocking rate. Although CAP policies contributed to stabilizing income in dehesa farms, they also produced loss of sustainability. Nevertheless, EU subsidies have become a key element in these enterprises, accounting for as much as 30% of the farms' revenues. In recent years, many of these traditional beef farms have turned to organic production trying to take advantage both of the new CAP subsidies and of new market trends. Theoretically, once these farms are organically certified, they can increase their profits by asin niche market with higer prices. Often things do not happen this way, and farms are forced to higher expenses on input purchases and greater realiance on subsidies if they want to remain in opearation. In the present context, in which the maintenance of agricultural subsidies in their current state is not clear -though with some confidence a redution can be expected in the medium term- these farms may face serious problems. Therefore, this paper examines the economic indicators of 90 conventional and organic dehesa beef farms in Extremadura (SW Spain), developing a comparative study. Specifically, the role of subsidies in both types of farms is reported, and strategies for the future of the future proposed based on alternative CAP scenarios.