A Comparison of Successful and Less Successful Organic Farms in Germany

Abstract

The conversion to organic farming has proven to be an economically interesting alternative for a large portion of the converted farms in the past. This contribution will consider the question of which factors influence the success of organic farming. The basis for the study is a series of data taken from the converting farms themselves as well as data of the farm accountancy data network. The success of conversion is measured by the profit difference in comparison to a conventional reference group, while the absolute performance of the organic farm is assessed classically on the basis of the profit per family work unit. The results show that the successful farms are more likely to be arable farms. Successful organic farms tend to produce in a more market-oriented manner. They get higher prices and produce a large number of products that can be sold for especially high prices on the organic market. As is to be expected, the successful farms also receive higher natural yields than the less successful farms and produce at a comparatively lower cost. Also, organic grants provide a lesser portion of their income, and they are thus less dependent on agricultural policies as less successful farms. A consideration of the most important socio-economic indices shows that successful farms are primarily those which are farmed full time. The farmers also have a comparatively above-average education in agriculture. A discussion of the most important consequences for politics and agricultural practice conclude this paper, drawn on the most important factors identified in the study.