The Economics of Conversion to Organic Field Vegetable Production

Abstract

Lack of data and knowledge of the transition to and the economics of organic vegetable production is often cited as a major reason why farmers have been reluctant to convert to organic systems with vegetables. This paper outlines the initial results of a DEFRA funded project investigating the economic implications of conversion to organic vegetable production. Whole farm financial data has been collected and analysed for a group of 5 farms from 1996-2001. The findings show that net farm income declined by an average of 66% during conversion, although it recovered to within 36% of pre-conversion levels once organic vegetable production began. This was a result of falls in output and smaller overall reductions in costs. In contrast costs of casual labour rose sharply following conversion. The costs of conversion, for this group of farms, is estimated at a total of £556/ha in comparison with organic aid payments available at £450/ha over 5 yrs. In conclusion the economics of conversion are very much dependent on the starting financial position of the farm prior to conversion, the rate at which the farms converts and the price of organic vegetables received once conversion is completed.