A Comparative Profitability Analysis of Organic and Conventional Farms in Emilia-Romagna and in Minnesota

Abstract

Recent discussion surrounding organic agriculture (also referred to as organic farming) has turned from just whether it represents a viable alternative to conventional agriculture to whether it would be adopted by a significant percentage of farmers. After a beginning phase in which the adoption was mainly due to an ethically based choice of the farmer, the success in the market and the increasing demand for organic products are increasing the number of farmers converting their farming system. Despite the continuing importance of non-economic factors and the uncertainty given by short-term and mid-term fluctuations of prices, a decisive point is whether the conversion to organic farming may be worthwhile from an economic perspective. The aim of the paper is to compare the actual profitability of farms using organic production methods to those farms using conventional production methods. The analysis will be based on several data-sets, provided on the Italian side by Emilia-Romagna Region, Italian National Institute of Agricultural Economics (INEA), Italian National Institute of Statistics (Istat), and on the US side by the Center for Farm Financial Management (CFFM) in the Department of Applied Economics, University of Minnesota.

Maurizio Canavari, Rino Ghelfi, and Sergio Rivaroli, Dipartimento di Economia e Ingegneria Agrarie, Alma Mater Studiorum-Università di Bologna. Kent Olson, Department of Applied Economics, University of Minnesota. Rino Ghelfi: sections 1 and 2. Maurizio Canavari: section 3. Sergio Rivaroli: sections 4.1 and 4.2. Kent Olson: sections 4.3 and 5.