Organic crop farming in the European Union: Impacts on farm-level input costs, labour, and income

What the paper says

Abstract The European Union (EU) aims to increase the adoption of organic farming as part of its Farm to Fork Strategy. However, farmers face uncertain adoption outcomes linked with crop yields, production costs, labour requirements, and ultimately farm income. Yet, comprehensive large-scale empirical evidence on the economics of organic crop farming in the EU is currently lacking. Therefore, this study assesses the economic implications of organic farming adoption in the EU using methods for treatment effect estimation in combination with a large-scale cross-country dataset. It consists of 151,560 nonorganic and 10,531 organic farms from the European Farm Accountancy Data Network, covering seven different crop production farm types, sixteen EU countries, and seven years. Our analysis specifically focuses on input costs (crop protection, fertilizer, total crop-specific costs), as well as labour input (including contract work costs and total and family labour inputs) and gross farm income on a per-hectare basis. We find that organic farming is associated with significantly lower crop protection and fertilizer expenditures as well as total crop-specific costs across all farming types, while contract work costs vary across farming types. We find only minor differences in farm-level labour inputs between organic and nonorganic farms. Farm income is smaller for organic farms without subsidies but higher when accounting for subsidies. However, effects are highly heterogeneous across farm types and across space. Our study contributes to a better understanding of the economic implications of organic farming expansion within the EU. These insights can inform both practitioners and policy-makers, facilitating the achievement of regional organic farming targets.