Assessing Organic Cherry Farmers’ Strategies under Different Policy Options

Abstract

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