Impact of agricultural liberalisation on the relative importance of price premiums for the profitability of organic farming

Summary

In the literature, impressive evidences can be found with respect to the importance of price premiums for the absolute and relative profitability of organic farms. However, depending on the agricultural support framework, the relative economic importance of price premiums varies considerably. Model results presented in this paper suggest that the relative importance is likely to decline, if producer prices decline substantially and more support payments are transferred directly to farmers as envisaged in the framework of currently discussed liberalisation reforms in Switzerland or the EU.