Profitability and policy dependency of organic farms in selected European countries

Summary

This paper provides an analysis of the impact of support payments on the profitability of organic farms in Europe under changing policy environments, using different data bases and different methodologies. The analysis shows that organic farming has proven to be a financially attractive alternative to conventional farming for many farms in Europe. Organic farming payments are important for the economic situation in most European organic farms. In the public debate on the policy framework for organic farming, the emphasis is often on specific regulations and support programmes for organic farming. However, in the EU the general framework of the Common Agricultural Policy is one of the main determinants of the relative competitiveness of organic farming. The 2003 CAP reform will generally benefit organic farms in Denmark and, partly, Germany, while in Austria, in relative terms the CAP reform has a more negative / less beneficial effect on organic than comparable conventional farms. In the new member states, incomes in typical organic farms are projected to rise significantly following accession.