Farmland allocation in the conversion from conventional to organic farming

Abstract

Organic farming enhances food quality and public health, and contributes to a more sustainable environment. Although certified organic farmland grew from 11 to 72.3 million hectares between 1999 and 2019, it constituted only 1.5 percent of the world’s agricultural farmland in 2019. The main impediment to the conversion from conventional to organic farming is the financial difficulties that farmers experience during the transition period in terms of decrease in yield and increase in farming costs owing to transitional practices. Furthermore, uncertainty in crop price and yield may aggravate the adverse effects of transitional practices. This article presents a multi-period optimization model for the allocation of farmland among crops and agricultural practices which allows farmers to plan a transition to organic farming while incurring a bounded shortfall of income. We calibrate our model to represent a grower of corn and soybean in Iowa and, using a seemingly unrelated regression model, crops revenues are simulated and utilized in the numerical experiments. The results show that i) our optimized crop rotation pattern outperforms other policies in the agriculture industry, including monoculture and systematic crop rotation, and that ii) our gradual conversion plan mitigates the chance of profit shortfalls.