Organic Farming Policies and the Growth of the Organic Sector in Denmark and the UK: A Comparative Analysis

Abstract

There has been little systematic analysis of the extent to which organic farming policies have influenced growth in the organic sector. Analyses of organic farming policy instruments, for the most part, provide extensive and detailed reviews of instruments applied either in a single country or across countries. Hence, there is a great need to examine systematically whether there is a relationship between the introduction of organic farming policies and the growth of the organic food sector, and whether particular designs of organic farming policies are more effective than others. In this paper, we take the first step in the endeavour of analysing the effects of organic farming by undertaking an econometric analysis of the relationship between organic farming policies in Denmark and the UK and their effects on the number of farmers and growers converting to organic production.

Full text

ORGANIC FARMING POLICIES AND THE GROWTH OF
THE ORGANIC SECTOR IN DENMARK AND THE UK:
A COMPARATIVE ANALYSIS
Carsten Daugbjerg (corresponding author)1, Richard Tranter2 and Garth Holloway3
1 Department of Political Science, University of Aarhus, Universitetsparken,
DK-8000 Aarhus C, Denmark, E-mail: cd[a]ps.au.dk
2 School of Agriculture, Policy and Development, University of Reading, P O Box 237,
Earley Gate, Reading RG6 6AR, United Kingdom, E-mail: r.b.tranter[a]reading.ac.uk
E-Mail: garth.holloway[a]reading.ac.uk
Abstract – There has been little systematic analysis of
the extent to which organic farming policies have influ-
enced growth in the organic sector. Analyses of organic
farming policy instruments, for the most part, provide
extensive and detailed reviews of instruments applied ei-
ther in a single country or across countries. Hence, there
is a great need to examine systematically whether there
is a relationship between the introduction of organic
farming policies and the growth of the organic food sec-
tor, and whether particular designs of organic farming
policies are more effective than others. In this paper, we
take the first step in the endeavour of analysing the ef-
fects of organic farming by undertaking an econometric
analysis of the relationship between organic farming
policies in Denmark and the UK and their effects on the
number of farmers and growers converting to organic
production.
Topics: (1) sustainability, (2) institutions, (3) environment
and resources
Key words: organic farming, policy
Archived at http://orgprints.org/13954

I. INTRODUCTION
There has been little systematic analysis of the extent
to which organic farming policies have influenced
growth in the organic sector. Analyses of organic
farming policy instruments tend to provide extensive
and detailed reviews of instruments applied either in a
single country or across countries, but offer no theo-
retically informed considerations on what mix of pol-
icy instruments contribute most to the growth of the
organic sector. For instance, Lampkin et al. (1999
p.vii) list the forms of state ‘support’ to organic sec-
tors under four categories: payments to producers;
marketing and regional development; legal definition
of organic; and information provision. Other, but not
dissimilar, studies have analysed the extent to which
organic farming policies have motivated farmers to
convert into organic production (e.g. Michelsen 2002)
or affected the economic viability of such farms (Col-
man 2000, Häring 2003, Tranter et al. 2007). Häring et
al. (2004, 25) observe that the development stage of
organic farming varies significantly across European
countries and argue that ‘different design of subsidies
for organic farming greatly influences the actual effect
on organic farming development’. However, it is less
clear precisely how these policy instruments bring
about growth in the organic sector.
So, there is a great need to examine systematically
whether there is a relationship between the introduc-
tion of organic farming policies and the growth of the
organic sector, and whether particular designs of or-
ganic farming policies are more effective than others.
Here, we take the first step in the endeavour of analys-
ing the effects of organic farming policies in Denmark
and the UK. We attempt to establish whether state or-
ganic farming policies affected farmers’ willingness to
convert to organic farming and which measures had a
significant impact.
II. COMPARISON OF DANISH AND UK OR-
GANIC FARMING POLICIES
In this section, we provide an overview over organic
farming policies in Denmark and the UK, distinguish-
ing between four types of policy instruments: direct
supply-side policy instruments, indirect supply-side
policy instruments, direct demand-side policy instru-
ments and indirect demand-side policy instruments.
A. Direct supply-side policy instruments
In both countries, direct supply side policy instruments
have been pivotal in the development of organic farm-
ing policy.
Denmark: Denmark was the first country to enact a
distinct law on organic farming (1987). It introduced
subsidies to ease conversion from conventional to or-
ganic farming for the first three years of the conver-
sion period. In 1989, additional conversion payments
for organic livestock were introduced.
As a consequence of implementation of EC Regula-
tion 2078/93, permanent subsidies for organic farming
were introduced in 1994 (see Table 1). This scheme
provided conversion subsidies, based on area, for two
years and permanent organic subsidies. To be eligible,
farmers had to farm organically for at least five years.
Table 1. Danish organic area payments, 1994-1997 (DKK
per hectare)
Year 1994 1995 1996
Conversion payment 300 275 200
Permanent organic payments 750 600 450
Payment for reduced fertiliser use 650 525 400
Supplement for environmentally sensitive
areas
215 215 215
Source : Bekendtgørelse no. 250, 1994.
To increase the supply of organic arable products and
pig meat, the subsidy was altered in 1996 (Table 2).
Additional support was provided to organic farms
without milk quotas and a special subsidy to pig pro-
ducers was also introduced (Strukturdirektoratet 1999,
136). In 2000, it was decided that support schemes di-
rected at selective commodity groups had to be abol-
ished. The market was perceived as a better means to
determine the level and type of organic production. In
the support scheme which came into effect in 2004,
permanent organic subsidies were abolished and farm-
ers were paid an environmental subsidy with organic
farming being given first priority for this. The only
remaining organic subsidy was the general conversion
payment to which only non-dairy farmers were eligi-
ble. Up to 2007 there was no wish to increase organic
milk production so dairy farmers were not eligible for
conversion subsidies. However, in 2006 forecasts en-
visaged future under-supply of organic milk so dairy
farmers again became eligible for conversion subsi-
dies.

3
Table 2. Danish organic area payments 1997-2003 (DKK
per hectare)
Year of five year obliga-
tion period
1 2 3 4 5
Permanent organic pay-
ments4,6
600 600 600 600 600
Conversion payment5,7 450 450
Supplement for envi-
ronmentally sensitive ar-
eas
500 500 500 500 500
Payment for farms with-
out dairy quota
2000 2000 12001,3 5001,3 5001,3
Payment for pig produc-
tion2
2000 2000 2000
Maximum area payment 5000 5000 4000 3500 3500
Maximum payment for
pig farms
5000 5000 5000 5000 5000
Source: Bekendtgørelse 226 1997; 881 1998; 883 2002; 700 2007,
Direktoratet for FødevareErhverv 2002, Økologisk Jordbrugsproduktion:
Vejledning om arealtilskud 2003.
1 Not paid to pig farmers.
2 This payment expired on 2 November 2002.
3 This payment was introduced in December 1998. It was not paid for the
five-year period that followed.
4 850 DKK until December 1998.
5 200 DKK until December 1998.
6 Before 1 January 1998 this payment was not paid to permanent grass
fields.
7 Not paid to permanent grass fields.
UK: Before 1993, Tranter et al. (2008) argued that
‘development of the European (and UK) organic sec-
tor was predominantly supply driven’ growing from
two broad strands - an ideological method of food
production and the encouragement by scientists inter-
ested in the link between soil and health. However,
since then the growth of organic farming has been
largely demand led to satisfy increasingly affluent
consumers (Willer, 2006); the UK government has en-
couraged farmers to meet this demand and, to help
them through the difficult conversion years, has pro-
vided financial assistance. The Organic Aid Scheme
(OAS) was the first such measure introduced in 1994
following EC Council Regulation 2078/92 allowing
Member States to provide financial support for con-
version under the agri-environment regulation (EC,
1992).
However, rates of payment under the OAS were
relatively low compared with other countries and up-
take was poor. Therefore, a new scheme was designed
to encourage further conversion - the Organic Farming
Scheme (OFS) which replaced the OAS in April 1999
- a move concurrent with the amendment of EC Regu-
lation 2092/91 to include livestock. The OFS was
seen as more helpful than the OAS: a one-off lump
sum payment was made of €750 per holding, spread
over three years for purchase of consultancy advice;
and (Table 3) payment rates were much higher than
under the OAS.
Table 3. Organic Farming Support Payments for England
1994-2007 (€ ha-1)1
OAS2
1994-
9
OFS3 from 1999
OAP4
2003-
Total Y1 Y2 Y3 Y4 Y5 Total Y1-5
AAPS5 eli-
gible land
and land in
permanent
crops
409 368 220 82 33 33 736 49
Other im-
proved land
82 286 172 65 25 25 573 38
Unimproved
land6
60 41 17 8 8 8 82 8
Source: Adapted from Tranter et al. (2007).
1 The exchange rate for 1 April 2002 of £1 = €1.04 has been used.
2 Organic Aid Scheme
3 Organic Farming Scheme
4 Organic Action Plan amendment to OFS, ongoing support once conver-
sion completed
5 Arable Area Payments Scheme
6 Such as moorland, rough grazing land and heath
The OFS was immediately successful leading to an in-
crease of some 150,000 ha in the area of organically
managed land in nine months. Indeed, the scheme was
forced to close after six months when the budget allo-
cated for the first two years was spent up (Lobley et
al., 2005). It reopened in January 2001.
In June 2003, on-going support after conversion
was introduced for a period of five years (Table 3). It
is likely that this on-going support was the cause of
numbers of producers and growers rising despite the
organic area falling since mid-2003.
The OFS closed to new entrants in March 2005 and
replaced by Organic Entry Level Stewardship, part of
the new Environmental Stewardship Scheme. The ra-
tionale for this was that organic farming provides
greater environmental benefits than conventional
farming. Hence, organic farmers receive €98 per ha
per year (twice the conventional rate) and have to farm
in a prescribed manner for five years. Payments are
also available for conversion with different rates for
different types of land and planned land uses (Defra,
2007e).

4
B. Indirect supply-side policy instruments
Denmark: In 1984 the National Association for Or-
ganic Farming agreed with the Smallholders’ Union
on the provision of an organic advisory service. Once
an organic extension service had been integrated into
the established advisory service, the Smallholders’
Union utilised its parliamentary contacts to have state
financial support for employing organic farming advi-
sors.
In 1996, funding was provided for additional advice
to farmers who were considering converting to organic
farming and, in 1997, a scheme was introduced in
which the state provided for 90% of the cost of con-
version advice 12 months before and after conversion.
In the mid-1990s, the state also provided funding for
teaching and information activities for organic farming
and the publication of organic farming manuals. Fur-
thermore, compulsory courses were introduced at
farming colleges (Strukturdirektoratet 1999, annex 1,
6-10).
An important component of Danish organic farming
policies has been state-funded research. In 1992, 50
million DKK for an organic research programme for
1993-1997 was allocated (Strukturdirektoratet 1999).
In 1996 the Danish Research Centre for Organic
Farming was established to coordinate research. The
most recent programme had a budget of 200 million
DKK for 2005 to 2011
(http://www.foejo.dk/forskning/index.html).
The Product Development Scheme provided in-
creased funding for organic product innovation pro-
jects in relation to production and processing. Innova-
tion projects for processing organic produce were also
eligible for increased support under the Food Technol-
ogy Research Programme (Strukturdirektoratet 1995,
154-55).
UK: Some financial, technical and marketing advice
was belatedly made available in the UK from June
1996. As a result of the poor uptake of the OAS, the
Government introduced the Organic Conversion In-
formation Service (OCIS) which supplied free, on-
farm, technical advice and information on conversion.
By 2001, 6,500 farmers had received a half-day visit
under OCIS and 2,400 farmers also made use of the
follow-up full day consultancy (Defra, 2002b). The
OFS, introduced in April 1999 gave a one-off lump
sum of €750 per holding, spread over three years, for
the purchase of consultancy advice.
Due to budgetary constraints, Defra closed the
OCIS on 31 December 2006. However, they said they
intended to re-open it in the future (Defra, 2006). Fi-
nally, a further measure introduced by Government to
aid organic farming was the publication of the ‘Action
plan to develop organic food and farming in England’
(Defra, 2002b) to identify what was needed to ensure
stable and strategic growth for the organic sector.
The Government has funded research on organic
production since 1991 when their spend was some
£500,000; in the 10 years after this it rose five times to
around £2.5 million a year (Costigan, 2002). In an in-
vestigation for Defra, the Elm Farm Research Centre
et al. (2005) found that: ‘total funding in UK organic
food and farming R&D between January 2000 and
March 2005 was in the region of £45 million with the
majority coming from the public purse (90%)’. Most
of this was experimental with crops research being the
most heavily funded area.
C. Direct demand-side policy instruments
Neither Denmark nor the UK apply direct demand-
side policy instruments. However, in Denmark, it has
been suggested that state, regional and local govern-
ment canteens should only use organic produce. So
far, government has refused to introduce such regula-
tions.
In the UK, Defra (2004) reviewed their original
‘Action plan’ to check on progress two years on. They
put forward ideas on how there should be an increase
in public procurement of organic food and measures
for the whole UK increasing the level of indigenous
sourcing of organic produce to 70% of the total by
2010. The major UK certification body announced
their expertise and availability for the provision of ad-
vice on public procurement of organic food matters
(Soil Association 2006b).
D. Indirect demand-side policy instruments
Denmark: The Law on Organic Farming of 1987 set
up state certification and labelling for organic farming.
The state label is the sole national organic label and
can only be applied by enterprises producing, process-
ing, packaging or labelling organic produce in Den-
mark. The introduction of the state label meant that
only state-certified farms would be allowed to sell or-
ganically labelled products and receive state support.
This caused some aggravation within the National Or-
ganic Farming Association (Nielsen 2005, 76-78) but,
as the state label became a success, the Association’s
dissatisfaction vanished. In 2002 and 2004, state
funding was provided to information campaigns about
the national state label and the EU label. Farmers do

5
not pay for certification and inspection; the costs of
operating the system are part of the involved agencies’
annual budget.
In addition to providing conversion subsidies, the
1987 Law on Organic Farming also granted financial
support for development initiatives related to process-
ing, marketing and distribution of organic food. From
1996-99, the state spent 100 million DKK subsidising
market research, product development and marketing
of organic produce. After 1999, the state continued
providing such support but funds allocated for these
activities declined from a peak of 97 million DKK in
2000 to 10 in 2005, but were increased again in 2007
to 40 million DKK. Between 1997 and 2000, the state
allocated 20 million DKK for training and other con-
version activities in state, regional and local govern-
ment canteens which wanted to use organic produce
(Strukturdirektoratet, 1999, 28). After 2000, this pro-
gramme was retained as part of the Innovation Act
(Bekendtgørelse no. 318, 2001 and Bekendtgørelse no.
865, 2006). The School of Organic Sales received
support to provide advice to these institutions and,
since 1998, the Veterinary and Food Safety Agency
has launched information campaigns on organic food
directed towards consumers, retailers and processors
(ibid., 26, see www.dffe.dk)
UK: In 1987, the Ministry of Agriculture, Fisheries
and Food founded the UK Register of Organic Food
Standards (UKROFS) to set baseline organic standards
and to approve and monitor the work of certification
bodies (Defra, 2002a). UKROFS standards were the
minimum standards which applied in the UK and were
based on EC regulation 2092/91 (EC, 1991). UK-
ROFS was succeeded in July 2003 by the Advisory
Committee of Organic Standards which provides gov-
ernment departments with advice on key areas relating
to organic production (Defra, 2007a). The Soil Asso-
ciation is by far the most important certification body
in the UK certifying over 80% of all organic food be-
ing sold in the UK. They inspect and license over
4,400 organic producers and manufacturers (Soil As-
sociation 2006a).
E. Comparison of organic policy instruments between
Denmark and the UK
Table 4 compares Danish and UK organic farming
policy instruments. It shows that such policy measures
were introduced 7 years earlier in Denmark than in the
UK and that the Danish government applies a greater
variety of policy instruments. Indirect supply-side pol-
icy instruments play a much greater role in Denmark
than in Britain, and did so early on in the rise in the
organic sector. Also, with the exception of state ac-
creditation of certification and labelling, the Danish
state is significantly more involved in creating demand
for organic produce through the introduction of a vari-
ety of indirect demand-side policy measures. The im-
portance given to demand-side and indirect supply-
side policy measures becomes clear when comparing
the funding for conversion and permanent organic
subsidies provided to farmers with those granted to
development projects. From 1988-94, 58% of the out-
lays under the Law on Organic Farming were spent on
such measures and only 42% on conversion and per-
manent subsidies for farmers. Within the first two
years after the introduction of subsidies for organic
Table 4. A comparison of organic farming policy typology between Denmark and the UK
Supply-side policy instruments (push) Demand-side policy instruments (pull)
Direct Indirect Direct Indirect
Denmark:
• Conversion subsidies introduced
in 1987. Additional conversion sub-
sidies for arable and pig farmers in-
troduced in 1996.
• Permanent organic subsidies in-
troduced in 1994.
UK:
• Conversion subsidies introduced
in 1994; increased in 1999.
• On-going organic subsidies intro-
duced in 2003
Denmark:
• Subsidies for organic extension in-
troduced in 1984.
• Support for education of organic
farmers introduced in 1995.
• Grants for organic research intro-
duced in 1992 .
UK:
• Limited subsidies for technical as-
sistance introduced in 1996.
• Free conversion advice introduced
in 1996.
• Further subsidy of technical advice
in 1999.
Denmark:
• None
UK:
• None
Denmark:
• State certification and labelling intro-
duced in 1987; fully operational in 1989.
• State sponsored market research and
marketing campaigns from 1988.
UK:
• State accreditation of certification
schemes and labels in 1987.
• Limited subsidies for marketing advice
introduced in 1996.

farming, approximately 50% of the outlays went to
development projects (Strukturdirektoratet 1995, 162).
However, as a result of the conversion waves of the
mid- and late 1990s, farm subsidies consumed most of
the budget for organic policy from 1997 onwards.
III. ASSESSING THE IMPACTS OF ORGANIC
POLICY MILESTONES EMPIRICALLY
Organic policy measures, or milestones, have been
considerable both in terms of complexity and in terms
of their intentions in both countries. And, while no
clear thematic developments emerge about their gen-
eral direction, their coverage and their precise influ-
ence on decisions by producers to switch from con-
ventional to organic production, the availability of
data concerning the timing of events and the numbers
of producers in the organic and non-organic subsec-
tors, raises considerable scope for nuanced empirical
enquiry.
Table 5 presents the data we used where it can be
seen that, in both study countries, the number of or-
ganic producers and growers grew by at least 20 times
in around 20 years. Thus, there does appear to be
some relationship between the ever-increasing num-
bers of organic producers in both the Danish and Brit-
ish agricultural sectors and the cumulative impacts of
the separate policy measures or milestones as we eye-
ball the series in Table 5. Whether these trends are
part of any systematic factors in either sector, or col-
lectively, is the matter we now take up in detail.
IV. METHODOLOGY
We interpret the data in three ways, where each is
linked with an over-arching common theme - that the
possibility exists that the separate policy milestones
have incrementally contributed to the growth of the
organic farming sectors in the UK and Denmark. In
order to assess this conjecture, we incorporate the data
using three alternative estimation vehicles. The first is
a simple linear regression with a binary variable indi-
cating the range of time over which each milestone
was enacted or in operation. Several of the policy
milestones continue in coverage throughout the end-
point of the range of the time series in question, which
is the period of monthly observations from 1989:1 to
2007:1 (217 in total); others existed for shorter peri-
ods. At interest, then, is the set of stepped response
functions that we manufacture for the purpose of
measuring a linear response in the regression relation-
ship with numbers of organic producers as the right-
hand side response.
A concern in this context is the fact that only 18 re-
sponse points exist for the various months. As de-
tailed in the methodological appendix, we treat the
missing values as latent data in the linear regressions.
On the right-hand side marketing-sales assistance for
organic producers is missing at one point, so we use
the average of the preceding and following periods.

Table 5. Area of organically managed land, number of organic producers and organic policy milestones, Den-
mark and UK, 1989-2007
Year
Organic land area
(’000 ha)
Organic producers
and growers Organic policy milestones
United Kingdom
Oct 89 18.3 557
Apr 93 30.4 655 EC Reg 2092/91 became effective 23 Jul 92
Feb 94 30.7 715 Organic Aid Scheme (OAS) introduced 1 Aug 94
Apr 95 45.2 828
Apr 96 48.2 865 Organic Conversion Information Service (OCIS) introduced 1 Jul 96
Apr 97 50.8 828
Apr 98 81.9 1064
Apr 99 276.0 1568 OAS closed & Organic Farming Scheme (OFS) introduced 1 Apr 99. OFS closed 1 Oct 99.
EC Reg 2092/91 amd to include livestock 1 Jul 99
Jan 00 425.9
Dec 00 527.3 2865
Dec 01 679.6 3691 OFS reopened 1 Jan 01
Jun 02 699.9 3865
Dec 02 724.5
Mar 03 741.2 4104 Ongoing support under Organic Action Plan introduced 1 Jun 03
Jan 04 695.0 4072
Jan 05 674.5 4321 Organic Entry Level Scheme introduced 1 Apr 05 & OFS closed 31 Mar 05
Jan 06 619.9 4285 OCIS closed 31 Dec 06
Jan 07 619.8 4639
Denmark
15 Jan 88: organic area conversion subsidies are introduced
1989 9.6 401 15 Jan 89: livestock subsidies introduced
1990 11.6 523
1991 18.0 672
1992 18.6 675
1993 20.0 640 1 Jan 93: extension & advisory service introduced
1994 21.1 676 16 Apr 94: permanent organic subsidies introduced; livestock subsidies abolished
1995 40.9 1050
1996 46.2 1166
1997 64.3 1617 27 Mar 97: special conversion subsidy for pig producers introduced; and for farms with-
out dairy quota introduced
1998 99.2 2228
1999 146.7 3099
2000 165.3 3466
2001 173.5 3525
2002 178.4 3714 2 Nov 02: special conversion subsidy for pig producers abolished
2003 168.0 3510 1 Nov 03: special conversion payment for farms without dairy abolished; a basic scheme
for permanent and conversion subsidies retained; dairy farmers no longer eligible to con-
version subsidies
2004 160.2 3166
2005 150.8 3036
2006 144.3 2794

Table 6. Empirical results
Coefficients OLS-UK OLS-Denmark Seemingly Unrelated Regressions
1 -0.12 0.03 0.19 0.23 0.26 0.29
2 -0.17 0.01 0.20 -0.03 0.01 0.05
3 -0.11 0.04 0.18 -0.03 0.01 0.05
4 -0.04 0.08 0.20 -0.01 0.03 0.07
5 0.19 0.32 0.45 -0.03 0.02 0.07
6 0.31 0.51 0.70 -0.06 -0.01 0.05
7 -0.17 -0.04 0.09 -0.00 0.04 0.09
8 0.06 0.28 0.50 0.01 0.08 0.15
9 -0.19 -0.00 0.19 -0.07 0.12 0.32
10 -0.07 0.11 0.29 -0.04 0.15 0.34
11 -0.20 -0.02 0.16 -0.03 0.04 0.10
12 -0.00 0.24 0.49 -0.03 0.17 0.37
13 -0.15 0.03 0.22 -0.11 -0.03 0.05
14 0.10 0.34 0.59 -0.02 0.07 0.17
15 0.33 0.46 0.61 0.05 0.11 0.17
16 -0.02 0.28 0.58 -0.13 -0.04 0.06
17 0.06 0.18 0.30 -0.04 0.01 0.06
18 0.06 0.09 0.14 0.00 0.01 0.01
19 0.06 0.09 0.14 0.01 0.01 0.02
20 -0.00 -0.00 0.00
'1. UK constant
'2. EC Reg 2092/91 became effective 23 Jul 92',...
'3. Organic Aid Scheme introduced 1 Aug 94',...
'4. (OCIS) introduced 1 Jul 96',...
'5. Organic Farming Scheme introduced 1 Apr 99',...
'6. EC Reg 2092/91 amd to include livestock 1 Jul 99',...
'7. Ongoing support under Organic Action Plan introduced 1 Jun 03',...
'8. Organic Entry Level Scheme introduced 1 Apr 05',...
'9. Denmark constant
'10. Jan 89: livestock subsidies introduced',...
'11. Jan 93: extension & advisory service introduced',...
'12. Apr 94: permanent organic subsidies introduced',...
'13. Mar 97: special conversion subsidy for pig producers',...
'14. Mar 97: special conversion subsidy for farms without dairy quota',...
'15. Mar 97 basic scheme for permanent and conversion subsidies retained',...
'16. marketing costs and expenditures',...
'17. marketing dummy for period 2001-2004')
'18. the variance parameter in the UK model.
'19. the variance parameter in the DK model.
'20. the cross-country correlation between UK and DK errors in the regressions.

V. RESULTS AND CONCLUSIONS
In the first model, we estimate separate regressions for
the Danish and UK time series obtaining the results
reported in Table 6. In this Table, column 1 indexes
the policy milestones explained at the foot of the table;
columns 2-4 report results for the OLS regression for
the UK; columns 5-7 report OLS results for Denmark;
and columns 8-10 report the results of estimation of a
system of seemingly-unrelated regressions for the
combined UK and Danish data. Within each estima-
tion the centre column reports posterior means of the
regression coefficients and the left- and right-side en-
tries report the 90% highest posterior density (hpd) in-
tervals. In this context, it is important to note that
90% hpd intervals that do not cross zero assert with
90% probability that the policy milestone in question
has the same sign as the posterior mean. The relevant
milestones in this context are emboldened. In the ini-
tial UK regression policy milestones 5, 6 and 8 are
significant; and in the initial Danish regression policy
milestones 14, 15 and 17 are significant. In the
pooled-data regression, only milestones 1 and 8 are
significant for the UK and only milestone 16 is sig-
nificant fort Denmark. The other observation that is
noteworthy is that the introduction of cross-country
equation error affects many of the locations and scales
of the relevant posterior density measures. Viewed
collectively, indications are available that some of the
policy milestones had their desired intentions, whereas
others have not, at least with the evidence available to
us at this present time. In particular, we observe rather
large increments in organic entry attributable to the
Organic Farming Scheme introduced (April, 1999),
the amendment to EC Reg 2092/91 to include live-
stock (July, 1999) and the Organic Entry Level
Scheme (April, 2005); and in Denmark, we observe
sizable entry increments attributable to the special
conversion subsidy for farms without dairy quota and
the basic scheme for permanent conversion subsidies
retention (March, 1997) and, importantly, the appear-
ance of assistance for organic producers (2001-2004).
Whether these conclusions remain robust to nuanced
empirical enquiry remains to be seen. Presently, the
statistical responsiveness of organic entry to some of
the various milestones suggests that additional work is
certainly warranted.
Appendix
The basic situation being considered is as follows. We
observe a response zi conditioned by the step functions
in the linear regression: zi = xi′β + i, i = 1, 2, .., N;
where zi ≡ (zi, zi2, .., zN)′ denotes an N-vector of latent
responses; xi ≡ (xi1, xi2, .., xiK) denotes the K-vector of
‘steps;’ and i denotes a random disturbance assumed
to be normally distributed with zero mean and vari-
ance given by σ2. Stacking over respondents leads to
the system: z = x β + , where z ≡ (z1, z2, ..,
zN)′; x ≡ (x1, x2, .., xN)′ denotes the N×K matrix of the
step covariates; and  ≡ (1,2,M)′ denotes the N×1
vector of random disturbances. Given the missing
data assume position on the left-hand side of (2), a
procedure for implementing the model follows direc-
tions outlined in Gelman, Carlin & Rubin (1992). In
the case where the errors in the separate equations cor-
responding to DK and UK agriculture are assumed to
be correlated, the system in (2) can be implemented in
Zellner’s (1962) seemingly unrelated regression
framework.
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