Dependency of organic farms on direct payments in selected EU member states: Today and tomorrow

Abstract

This paper examines the development of the role of government support in the financial situation of organic farms in selected Western and Eastern European countries, contrasting dependency on direct payments with that of conventional farms and assessing the impact of foreseeable changes in the political and economic environment. The results show that direct payments play an important role in the financial viability of organic farms in both Western and Eastern European countries. The level of specific support for organic farming is put into perspective, as other support payments and market returns contribute larger shares to total farm revenue in all the countries analysed. Modelling analyses show that support payments will continue to play an important role in the profitability of organic farms in Western Europe after implementation of the 2003 reform of Common Agricultural Policy in the EU. For organic farmers in Eastern European countries, the importance of support payments increases strongly with EU accession, as first pillar payments are introduced and environmental payments are expanded significantly.