Economic Performance of Conventional, Organic, and Biodynamic Farms

Authors
Z. Naglova
E. Vlasicova
Department of Economics, Faculty of Economics and Management, Czech University of Life Sciences Prague, Kamycka 129, Praha 6-Suchodol, 160 00, Czech Republic.
Abstract
Organic agriculture in the Czech Republic is taking on a greater importance: the number of the organic farms is increasing and the availability of bio products is rising too. The aim of this study was to evaluate and compare the economic situation of organic, biodynamic, and conventional farms by using financial analysis indicators, performance indicators, economic efficiency indicator, and multidimensional intercompany comparison methods. Furthermore, the subsidies impact on farms’ profits, sales, and return on assets indicators by a linear regression model with AR (AutoRegressive 1) process was analyzed. A total of 389 Czech farms receiving subsidies from 2007 to 2012 were selected. From these, 273 farms were conventional, 112 organic, and 4 biodynamic. Organic farms were the most profitable and got the best results on the economic efficiency indicator and took the first place in the intercompany comparison. Subsidies worsen the organic farms’ economic situation, however, without statistical significance. Biodynamic farms received the highest amount of subsidies. In some years, these farms did not gain profit. Despite the worst results of economic efficiency indicator, biodynamic farms were placed as second in the intercompany comparison. Subsidies improved the biodynamic farms’ economic situation (statistically insignificant) and could play a role as a motivating factor. Conventional farms had the highest values of input and output indicators (except profit) and they received the lowest amount of subsidies. Subsidies had a statistically significantly positive effect on the profitability of these farms, though with a negative effect on sales.

Keywords

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Journal of Agricultural Science and Technology
Volume 18, Issue 4
July and August 2016
Pages 881-894