Impacts of the 2003 CAP Reform on Organic Farms

The 2003 reform of the Common Agricultural Policy (CAP) constitutes a rather fundamental shift in the agricultural policy of the EU. Many of the individual elements of the reform are likely to affect organic and conventional farms differently. This article analyses the impacts of the 2003 CAP reform on organic farms, combining an extensive survey of organic farmers in several EU member states with a farm modelling approach based on the European Farm Accountancy Data Network (FADN). The results highlight that impacts on the relative competitiveness of organic farms will depend strongly on the national implementation of the 2003 CAP reform and will often differ by farm type. In general, the impact will be more beneficial to organic farms in countries that have opted for full rather than partial decoupling, and in countries which have implemented the Single Farm Payment on the basis of regional flat rate payments rather than on the basis of historical, individual farm references. While the reform increases the incentive for conversion to organic farming, the impacts of other policy and market changes over the next ten years remain less clear, making the formulation of strategies for farmers and policy makers difficult and providing challenges for future research. Copyright (c) 2009 The Authors. Journal compilation (c) The Agricultural Economics Society and the European Association of Agricultural Economists 2009.