Various aspects of farm management are analysed, which can be of interest for farmers, advisors and policy makers. The basic tools of management are recalled, as well as yields and labour demand

Santucci, Fabio M.

English

Organic Eprints

1Fabio M. Santucci, DSEEA Uni PG 1“Farm management issues in OA ”Fabio Maria SantucciDSEEA – Sezione di EconomiaFabio M. Santucci, DSEEA Uni PG 2Tools1. Farm balance sheet 2. Farm income statement3. Various partial accounts2Fabio M. Santucci, DSEEA Uni PG 3Who is interested in such issues?• The producers, who want to know if OA is profitable…• The advisors, who want to give correct advise• The policy makers, who want to know which type of support (if any) is necessary• The scientists, who have to elaborate new  knowledge• The consumers, who want to know why some organic foods are more expensive Fabio M. Santucci, DSEEA Uni PG 4Farm balance sheetNew star farm, December 31, 200X            Assets        Value         Liabilities        ValueCurrent assets 2.000 Current liabilities 1.500Intermediate assets 10.000 Intermediate liabilities 12.000Fixed assets 130.000 Long term liabilities 50.000Total liabilities 63.500Net worth 78.500Total assets 142.000 Total liab + net worth 142.0003Fabio M. Santucci, DSEEA Uni PG 5Farm Income StatementNew star farm, Fiscal Year xxxx                          Assets    ValueCash farm income: 14.400 - sales of products 10.000 - sales of services 1.000 - governement subsidies 500 - other cash incomes (prizes, insurances, etc.) 400 - changes in capital assets 2.500Cash farm expenses 9.000 - variable expenses 3.000 - fixed expenses 6.000Net cash farm income (1-2) 5.400Non cash adjustements 8.000 - depreciations 6.000 - inventory changes 2.000Family consumption 4.000Net farm income (3-4+5) 1.400Fabio M. Santucci, DSEEA Uni PG 6Questions, public and private ones• How much is the net worth of this farm?• How much money (??) did this farmer make in one year?• Is this crop profitable? • Should I grow carrots or sugar beets?• Should I employ more farm hands or purchase a machine? • Should I sell the raw product or should I process it into something else? • Which interest rate can this farmer pay on farm operational credit? • Which level of subsidy is needed by this farmer / crop?4Fabio M. Santucci, DSEEA Uni PG 7OECD classification of policies 1. Market price support: policies affecting producer and/or consumer prices (levies, quotas, subsidies per kg, guaranteed prices, etc..); Æ to be eliminated2. Direct payments: decoupled subsidies (with conditional ties);3. Input cost reduction: subsidies on inputs, on wages and social security, water, credit, land, etc. Æ to be eliminatedFabio M. Santucci, DSEEA Uni PG 8OECD classification 2 4. Provision of services: research, extension, training and education, pest monitoring, soil analysis, planning, quality and safety control, certification;5. Other measures, such as regional marketing, rural development projects, etc..5Fabio M. Santucci, DSEEA Uni PG 9Is organic agriculture profitable?• Within the EU (since 1992): no… it needs subsidies.. • All over the world and within EU, before 1992: yes, if…Compared to what?• Traditional agriculture?• Conventional agriculture? Where?• Flatland, irrigated, input intensive production systems?• Mountain, rainfed, low external inputs systems? Fabio M. Santucci, DSEEA Uni PG 10What can we compare?• Yields? What yields? Dry matter? Shelf life? Proteins? Qualities? • Costs ? Open costs or hidden ones? • Water consumption?• Energy consumption?• Labor demand?• Environmental impact? Biodiversity, CO2 sequestration?6Fabio M. Santucci, DSEEA Uni PG 11Soft Wheat (t ha-1)Years Authors Location Org ConvOrg/Conv %2006-08 Paffarini 2009 Umbria 6,4 7,2° -11,12008 Chiorri, Galioto North - Centre 4,3 3,5 22,12007 Nigro, Scaltriti Emilia Romagna 5,2 6,5 -20,02006 Carillo Scardera e Valli 2008 Italia  4,1 4,0 1,82004-05 Mazzoncini et al. Toscana 2,4 5,5 -56,42001 Migliorati Umbria 5,3 3,9 35,91999-2001 Perenzin et al. Lombardia (hills) 5,1 5,4 -5,61997 Sanna Italia 3,9 4,8 -18,81994-96 Zanoli, Fiorani e Gambelli Marche  3,3 4,0 -17,51992 Mosso e Pagella Piemonte 4,1 4,2 -2,41992 Cicia e D'ercole Molise 3,2-3,5 3,5-4,01992-94 Chiorri Umbria 2,5-3,7 4,2-4,31993 Ciani et al. Umbria 4,3 6,3 -31,71989 Pollastri Emilia Romagna 5,1 5,0 2,0° = low input Fabio M. Santucci, DSEEA Uni PG 12Corn (t ha-1)Years Authors Location Org ConvOrg/Conv %2006-08 Paffarini 2009 Umbria 3,4        4,8° -29,82006-2007 Chiorri and Galioto 2008 North Italy 4,3        rainfed2006-2007 Chiorri and Galioto 2008 North Italy 8,8        irrigated2004 Repetti 2005 Emilia Romagna 10,9       (range  8,01 - 12,93)2002-04 Bonomi 2006 Lombardia 10,2     1999-2007 Piazza Emilia Romagna 8,5       2003 Repetti 2004 Lombardia 10,0      (range 8,38 - 11,58)2000-01 Chiorri and Pignataro Umbria 5,3        5,7               -7,01996 Gregori Friuli 11,6      11,6             0,01989 Pollastri Emilia Romagna 4,6        8,3               -44,6° = low input 7Fabio M. Santucci, DSEEA Uni PG 132006-08 Soft wheat on rainfed hills (€ ha-1)Item LEI OA OA/LEI % - Yield (t/ha) 7,2 6,4 -11,1 - Price (€/t) 200 274 36,9Total variable costs 1.340 1.239 -7,5 - Operations 1.074 914 -14,9 - Inputs 247 307 24,3 - Interest 19 18 -5,3Total output 2.369 2.723 14,9 - Main product 1.447 1.757 21,4 - Byproduct 350 311 -11,1 - EU OA / LEI subsidies 185 267 44,3 - EU SFPS 388 388 0,0Gross Margin 1.029 1.484 44,2SFPS = Single Farm Payment SchemeSource: Paffarini, 2009Fabio M. Santucci, DSEEA Uni PG 142006-08 Irrigated tomato for industry (€ ha-1)Item LEI OA OA/LEI % - Yield (t/ha) 87,4 76,0 -13,0 - Price (€/t) 93 113 21,5Total variable costs 6.052 7.477 23,5 - Operations 2.200 2.942 33,7 - Inputs 3.793 4.497 18,6 - Interest 60 38 -36,7Total output 8.561 8.937 4,4 - Main product 8.061 8.357 3,7 - EU OA / LEI subsidies 500 580 16,0 - EU SFPSGross Margin 2.509 1.460 -41,8SFPS = Single Farm Payment SchemeSource: Paffarini, 2009not yet implemented8Fabio M. Santucci, DSEEA Uni PG 15Labor..• Does OA demand more or less labor than conventional agriculture? • Labor intensive – labor extensive farming systems (and food processing)• Is labor an internal resource (family, group member) or an external input?• Anyhow.. What about the value of the product?Fabio M. Santucci, DSEEA Uni PG 16Labor demand in Danish farms (i. n.)Category Conv Org All farms 100 202 5 - 10 ha 100 163 11- 30 ha 100 286 > 30 ha 100 156Open field veggies 100 115Cereals and mixed 100 220Dairy cattle and crops 100 2039Fabio M. Santucci, DSEEA Uni PG 17Labor demand in Umbria (1992-94)Items Farms (no.) 19 349 2 80 11 189 6 80 Area (ha) 22,8 21,4 45,9 15,5 15,9 19,3 27,7 28 Labor/ha (h) 119 197 51 268 133 216 141 158 FNI/h family labor (000 IT lira)64 - 2543 10 3Region Flatland Hills MountainFabio M. Santucci, DSEEA Uni PG 18( Agriculture, food and health )• What about the consequences on health of conventional agriculture and abundance of cheap food on health?• Obesity, cardiovascular diseases, type 2 diabetes, unhappiness, etc..• Private medical costs paid by the consumers• Social costs paid by the State = the tax payers• An holistic analysis of the food sector should take into consideration all aspects.10Fabio M. Santucci, DSEEA Uni PG 19As partial conclusions• There is not ONE organic agriculture, but MANY organic farming systems• The farm should be considered as a whole, with an holistic approach• Diversification, both horizontaland vertical (as suggested by the EU rural development policy) is a key feature of organic agriculture• Successful organic farmers manage complex farms, labor intensive, market oriented.Fabio M. Santucci, DSEEA Uni PG 20As partial conclusions• When all subsidies are considered, conventional farming is largely inefficient• The economic and social consequences  are more employment and higher added value at the farm and in rural areas11Fabio M. Santucci, DSEEA Uni PG 21Thanks for attention 

Farm management issues in organic agriculture

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