Assessing agricultural policy incentives for Greek organic agriculture: A Real options approach

The adoption of organic agriculture or livestock involves risk and uncertainty, and to overcome this, well designed schemes are required. Are the current support measures attractive for farmers who wish to convert to organic? At first, this study tries to assess the optimal investment trigger for a new comer into organic dairy sheep farming system and secondly, to evaluate the investment profitability of an existing organic farmer in his attempt to improve his farm. Results indicate that the framework of real options analysis is an appropriate form of analysis if the question of investment profitability is examined under risk and uncertainty and the role of economic subsidies offered to organic farmers is assessed.organic agriculture, dairy sheep farming, real options, agriculture policy, Agricultural and Food Policy, Farm Management, Land Economics/Use,

Assessing economic incentives for dairy sheep farmers: A real options approach

New policy measures have been introduced to transform Greece’s agriculture into a more modern and environmentally friendly agriculture. Adopting new technology and environmentally friendly production systems involves risk and uncertainty, which in turn stress the need for well designed policy schemes. This study attempts to examine the effects of income variability upon the decision to adopt new technology and environmentally friendly production systems by introducing the real options analysis to dairy sheep farming in Greece. The real options procedure revealed that the investment in new technology in dairy sheep farms under organic scheme is profitable. Attractive economic incentives that are offered by the applied agricultural policy to young farmers compensate for the risk and uncertainty of the activity.agricultural policy, organic sheep farming, real options, Livestock Production/Industries,

Policy implementations for organic agriculture: A real options approach

Organic farming has experienced a vast increase within the EU, despite the fact that it implies greater risk and uncertainty than that of conventional farming. This is the result of the increased environmental concern and the rising demand for quality food, which led to the implementation of the organic policy scheme. Nevertheless, the production of organic fruits, including cherries, is still limited in the EU. Farmers will adopt this alternative farming system only if the support provided by the existing policy regime out weights the increased risk and uncertainty. This study explores the effectiveness of the current policy measures for the production of organic cherries in Greece, using the real options methodology. The framework of real options analysis is an appropriate form of analysis so as to examine the investment’s profitability under risk and uncertainty and assess the economic incentives offered to organic farmers. The results indicate that the economic incentives provided by the existing policy regime, compensate for the risk and the uncertainty that farmers are undertaking. Furthermore, this study reveals that the profitability of the economic activity explored, lies mainly on the subsidies organic farmers receive.Keywords: organic agriculture, real options, agriculture policy, uncertainty, Agricultural and Food Policy, D81, Q14, Q18,

MODELLING ECONOMIC ALTERNATIVES FOR TOBACCO PRODUCERS: THE CASE OF SHEEP FARMING

After the introduction of the new tobacco regime, many regions in Greece, formerly specialized in tobacco cultivation, are now facing serious threats of economic and social decline. Sheep farming is considered by many analysts as a viable alternative to tobacco. This study analyses the financial performance of sheep production and the risk that producers are taking. Through a stochastic efficiency analysis with respect to a function we explore the economic viability of conventional and organic sheep farming; key factors determining the economic outcome of these activities are also investigated. Both organic and conventional sheep farming appear as viable alternatives. The viability of organic farming lies, mainly, in organic payments. Conventional farming generates a slightly lower but less uncertain net return.organic farming, dairy sheep, risk analysis, SERF, agricultural policy, Agricultural and Food Policy, Farm Management, Livestock Production/Industries, Risk and Uncertainty,

Distribution Dynamics of Food Price Inflation Rates in EU: An Alternative Conditional Density Estimator Approach

This paper examines the existence of convergence and distribution dynamics of food price inflation rates within the European Union. Differences in such specific price index inflation rates and changes in their regional distributions reflect largely differences and developments in market conditions and structures. Traditional measures and approaches to β-convergence and σ-convergence, fail to capture sufficiently the evolving distributional dynamics. The latter includes possible mobility prospects within distributions and potential formation of clubs. To deal with these issues, the paper adopts developments in the literature of non parametric econometric methods and employs an alternative conditional density estimator as well. Implementation of this estimator is superior, not only to the restrictive discrete Markov chain approaches, but also to the usual estimation of conditional densities using stochastic kernels. The adopted estimator has smaller integrated mean square error than the conventional estimators. Panel data analysis of β-convergence is conducted too, using panel unit root tests. Data used are the harmonized consumer price indices of food and eleven specific food product groups for 15 European countries, older member states of the EU. Extracted evidence based on the estimates is presented, analyzed, and conclusions are discussed

Distribution Dynamics of Food Price Inflation Rates in EU: An Alternative Conditional Density Estimator Approach

This paper examines the existence of convergence and distribution dynamics of food price inflation rates within the European Union. Differences in such specific price index inflation rates and changes in their regional distributions reflect largely differences and developments in market conditions and structures. Traditional measures and approaches to β-convergence and σ-convergence, fail to capture sufficiently the evolving distributional dynamics. The latter includes possible mobility prospects within distributions and potential formation of clubs. To deal with these issues, the paper adopts developments in the literature of non parametric econometric methods and employs an alternative conditional density estimator as well. Implementation of this estimator is superior, not only to the restrictive discrete Markov chain approaches, but also to the usual estimation of conditional densities using stochastic kernels. The adopted estimator has smaller integrated mean square error than the conventional estimators. Panel data analysis of β-convergence is conducted too, using panel unit root tests. Data used are the harmonized consumer price indices of food and eleven specific food product groups for 15 European countries, older member states of the EU. Extracted evidence based on the estimates is presented, analyzed, and conclusions are discussed.Kernel density estimator, convergence, distribution dynamics, food price inflation., Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,

Assessing agricultural policy incentives for Greek organic agriculture: A Real options approach

The adoption of organic agriculture or livestock involves risk and uncertainty, and to overcome this, well designed schemes are required. Are the current support measures attractive for farmers who wish to convert to organic? At first, this study tries to assess the optimal investment trigger for a new comer into organic dairy sheep farming system and secondly, to evaluate the investment profitability of an existing organic farmer in his attempt to improve his farm. Results indicate that the framework of real options analysis is an appropriate form of analysis if the question of investment profitability is examined under risk and uncertainty and the role of economic subsidies offered to organic farmers is assessed

Policy implementations for organic agriculture: A real options approach

Organic farming has experienced a vast increase within the EU, despite the fact that it implies greater risk and uncertainty than that of conventional farming. This is the result of the increased environmental concern and the rising demand for quality food, which led to the implementation of the organic policy scheme. Nevertheless, the production of organic fruits, including cherries, is still limited in the EU. Farmers will adopt this alternative farming system only if the support provided by the existing policy regime out weights the increased risk and uncertainty. This study explores the effectiveness of the current policy measures for the production of organic cherries in Greece, using the real options methodology. The framework of real options analysis is an appropriate form of analysis so as to examine the investment’s profitability under risk and uncertainty and assess the economic incentives offered to organic farmers. The results indicate that the economic incentives provided by the existing policy regime, compensate for the risk and the uncertainty that farmers are undertaking. Furthermore, this study reveals that the profitability of the economic activity explored, lies mainly on the subsidies organic farmers receive

Assessing economic incentives for dairy sheep farmers: A real options approach

New policy measures have been introduced to transform Greece’s agriculture into a more modern and environmentally friendly agriculture. Adopting new technology and environmentally friendly production systems involves risk and uncertainty, which in turn stress the need for well designed policy schemes. This study attempts to examine the effects of income variability upon the decision to adopt new technology and environmentally friendly production systems by introducing the real options analysis to dairy sheep farming in Greece. The real options procedure revealed that the investment in new technology in dairy sheep farms under organic scheme is profitable. Attractive economic incentives that are offered by the applied agricultural policy to young farmers compensate for the risk and uncertainty of the activity

MODELLING ECONOMIC ALTERNATIVES FOR TOBACCO PRODUCERS: THE CASE OF SHEEP FARMING

After the introduction of the new tobacco regime, many regions in Greece, formerly specialized in tobacco cultivation, are now facing serious threats of economic and social decline. Sheep farming is considered by many analysts as a viable alternative to tobacco. This study analyses the financial performance of sheep production and the risk that producers are taking. Through a stochastic efficiency analysis with respect to a function we explore the economic viability of conventional and organic sheep farming; key factors determining the economic outcome of these activities are also investigated. Both organic and conventional sheep farming appear as viable alternatives. The viability of organic farming lies, mainly, in organic payments. Conventional farming generates a slightly lower but less uncertain net return