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A Comparative Analysis of Organic and Conventional Farming Profitability

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  • Brožová, I.
  • Beranová, M.

Abstract

The objective of this article is to determine the economic performance of organic farms compared with conventional farms. The analysis included a set of farms the concentration of which is in natural and climatic conditions typical for this type of farming high. The outputs may be therefore considered representative and generalised. In order to determine the performance of these farms, their production basis was first assessed by using the indicators of available assets and assets coverage resources. Consequently, their efficiency was assessed based on the profit. For the purposes of comparison, the profit was (in various forms) converted to a hectare of agricultural land. The economic results were also compared with the average level achieved in the EU. The final part of the research focused on the evaluation of the economic and financial standing of the farms using selected return, liquidity, debt, and activity related ratio indicators. The established results show that the situation of organic farms on the national level tends to be economically more favourable. This is demonstrated by the higher share of profit-making farms and more favourable values of certain ratio indicators, i.e. those concerning profitability, liquidity, and interest coverage. The comparison with the average values achieved in the EU revealed a significantly more favourable situation in the Czech Republic.

Suggested Citation

  • Brožová, I. & Beranová, M., 2017. "A Comparative Analysis of Organic and Conventional Farming Profitability," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 9(1), March.
    • Handle: RePEc:ags:aolpei:262445
    DOI: 10.22004/ag.econ.262445
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    1. Vonne Lund & Sven Hemlin & William Lockeretz, 2002. "Organic livestock production as viewed by Swedish farmers and organic initiators," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 19(3), pages 255-268, September.
    2. Madau, Fabio A., 2007. "Technical Efficiency in Organic and Conventional Farming: Evidence from Italian Cereal Farms," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 8(1), pages 1-17, January.
    3. Kerselaers, Eva & De Cock, Lieve & Lauwers, Ludwig & Van Huylenbroeck, Guido, 2007. "Modelling farm-level economic potential for conversion to organic farming," Agricultural Systems, Elsevier, vol. 94(3), pages 671-682, June.
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    1. Rebecca Buttinelli & Raffaele Cortignani & Gabriele Dono, 2021. "Financial sustainability in Italian Organic Farms: An analysis of the FADN Sample," Economia agro-alimentare, FrancoAngeli Editore, vol. 23(3), pages 1-32.

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    Keywords

    Farm Management; Productivity Analysis;

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