Are there enough stimuli to develop sustainable farming in Lithuania?

Abstract

PurposeThe new programming period of 2021–2027 of the European Union (EU) Common Agricultural Policy requires reconsidering the policy measures. In the new period, the European Commission is to allow each member state (MS) developing eco-schemes to support and/or incentivise farmers to observe agricultural practices beneficial for the climate and the environment beyond their mandatory requirements. The purpose of this paper is to compare the performance of organic and conventional family farms.Design/methodology/approachOrganic farming under the organic farming measure of the Rural Development Programme is one of the most widely applied sustainable farming practices in the EU as well as in Lithuania. By assessing the ex post economic impact of the organic farming measure on farm performance indicators, the authors seek to reveal possibilities and obstacles for the implementation of sustainable farming practices. A counterfactual ex post impact assessment method – propensity score matching (PSM) analysis – was used to evaluate ex post economic impact of the organic farming measure on the performance of farming indicators.FindingsThe application of the PSM allowed assessing both the effectiveness of the implemented measure and possibilities for applying this measure in the future. The research has revealed that organic farming is less profitable and the gap between farm income in organic and conventional farms has increased during the period of 2007–2013.Originality/valueThe most comprehensive economic information about the farm activities from the Farm Accountancy Data Network (FADN) was used for the ex post economic impact evaluation of the organic farming measure in Lithuania. The matched groups of Lithuanian family farms (organic and conventional) were compared. The results of the research provide a new knowledge about the effectiveness of the organic farming measure in Lithuania and suggest the ways of their improvement in the future. The results can also be generalised to other countries with similar agricultural structure.