Financial results from research work carried out for the Department of Environment, Food and Rural Affairs (DEFRA) by the Organic Farming Research Unit at the IRS, UWA on the economic performance of organic farms in 2001/02 are presented in this report. A fundamental aim of this work is to assess the financial performance of organic farms differentiated by farm type, in order to inform DEFRA policy-making with respect to economics of organic farming, and to provide a basis for assessments by farmers, advisers and other interested parties of the farm-level implications of conversion to and continued organic farming.
This research area builds on previous economics work on organic farming carried out by IRS, UWA (Project OF0190, covering 1995/961 to 1998/992). Here, data is shown for the 2001/02 financial year, which is the first of a series of three reports covering the financial performance of organic farm types including cropping, horticulture, lowland and LFA dairy, lowland and LFA cattle and sheep and mixed farming systems for 2001/02 up to 2003/04. In comparison with the earlier reports, there has been a significant improvement in the numbers of farms for which data have been obtained.
Summarised and detailed financial input, output, income, liabilities and assets and some physical performance measures are presented based on current Farm Business Survey data collection and collation guidelines. The samples of organic farms per robust farm type are sufficiently large to give a reasonable level of confidence in the data; however, it should be noted that the organic farm samples are not statistically representative of their type, although the results can be seen as a reasonable indication of farm income levels for organic farms.
An additional element of this work is the inclusion of comparable conventional farm data for the farm types shown. Each organic farm within this study was matched with the averaged results for a comparable cluster of conventional farms based on the resource endowment of individual organic farms. Broadly speaking, the parameters used to select comparable farm clusters included farm type, FBS region, LFA status, utilisable agricultural area, milk quota holding (where applicable) and farm business size. For each farm type, the results for each cluster were averaged and compared with the average for the individual organic farms.
Overall, organic farms showed a similar or higher level of net farm income for all farm types compared to the conventional farms. The greatest differences were seen in the cropping, horticulture, LFA dairy and mixed farm types. Both organic and conventional lowland dairy types performed similarly. For management and investment income, only the organic lowland and LFA cattle and sheep farms showed a negative value. Conversely, the comparable conventional farm types showed a negative value with the exception of the lowland dairy farms.
Gross margin data is presented for organic dairy herds including the top and bottom 5 performing herds. Cattle and sheep gross margins are shown for lowland and LFA farm types in addition to breeding pig gross margins. Crops shown include winter and spring wheat and barley, spring oats, beans and potatoes and a further five horticultural crops
