Abstract
Organic farming has experienced a vast increase within the EU. Especially in Greece, the rapid growth of the organic sector, since the early ‘90s, was accompanied by the introduction of various organic crops. Among them, organic fruit crops have been gradually introduced, as farmers have realised the promising growth of the demand for organic fruits. However, organic farmers face significant yield and price risks, which combined with the high initial establishment costs, provoke difficult investment decisions. Rational farmers are willing to adopt organic farming only if the economic outcomes outweigh the associated increased risk and uncertainty. This study employs stochastic efficiency analysis to compare the economic outcomes of organic and conventional cherry production in Northern Greece. It, thus, explores whether the expansion of organic cherry production generates satisfactory economic results for farmers and whether it can be regarded as a promising alternative to conventional production activity. Results reveal that the current Greek policy scheme may endanger investments in organic cherry farming. Further assessment of the impact of varying organic subsidy and discount rate levels on the net present value underlines the detrimental effects of the financial crisis. An enhanced policy framework is required to enable and support climate-smart agriculture.
Highlights
Organic farming has vastly increased in European countries during recent decades
In Greece, the organic sector has experienced even more rapid growth, as organically cultivated area increased from 591 ha in 1993 to 309,822 ha in 2010 (8.2% of the utilized agricultural area (UAA)) [3]
This study explores whether the expansion of organic cherry production generates satisfactory economic results for farmers and whether it can be regarded as a promising alternative productive activity
Summary
Organic farming has vastly increased in European countries during recent decades. The robust demand for qualityHow to cite this paper: Tzouramani, I., et al (2014) Assessing Organic Cherry Farmers’ Strategies under Different Policy Options. This trend is expected to continue, as the growth in demand for organic products steadily outpaces the corresponding supply even during the current financial recession [2]. European organic farmland reached 7.6 million hectares (ha) in 2008, which corresponds to 4.1% of the total utilized agricultural area (UAA) and accounts for almost 190,000 active holdings in the sector. The structure of the 24,000 organic holdings primarily consists of arable crops (27.4%), permanent crops (21.5%) and permanent pasture (49.0%) [3]. The diversification of organic crops has been increasing as crops with superior market prospects such as cereals (11.4%), forages (9.6%), and vegetables and fruits (1.3%) have gradually been introduced
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