Assessing Organic Cherry Farmers’ Strategies under Different Policy Options

Abstract

Organic farming has experienced a vast increase within the EU. Especially in Greece, the rapid growth of the organic sector, since the early ‘90s, was accompanied by the introduction of various organic crops. Among them, organic fruit crops have been gradually introduced, as farmers have realised the promising growth of the demand for organic fruits. However, organic farmers face significant yield and price risks, which combined with the high initial establishment costs, provoke difficult investment decisions. Rational farmers are willing to adopt organic farming only if the economic outcomes outweigh the associated increased risk and uncertainty. This study employs stochastic efficiency analysis to compare the economic outcomes of organic and conventional cherry production in Northern Greece. It, thus, explores whether the expansion of organic cherry production generates satisfactory economic results for farmers and whether it can be regarded as a promising alternative to conventional production activity. Results reveal that the current Greek policy scheme may endanger investments in organic cherry farming. Further assessment of the impact of varying organic subsidy and discount rate levels on the net present value underlines the detrimental effects of the financial crisis. An enhanced policy framework is required to enable and support climate-smart agriculture.