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Comparative analysis of revenue and land prices between organic and conventional farming

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  • Veron, Emilien

Abstract

To satisfy the objectives of the European Green Deal, a quarter of the EU's agricultural land should be organic by 2030, compared to 8.5% today. France, the largest European country in terms of agricultural production, must become a major player in this transition. However, French farmers are hesitant to convert because of the uncertainty of whether organic farming will improve their income or not. We will conduct a double comparative analysis between the dierences in income (on 103,000 observations distributed between 2004 and 2019) and the dierences in the value of agricultural land (33,000 transactions between 2015 and 2019) between organic and conventional farmers. The study shows that the current monetary incentives for conversion are very low. Panel data modelling using the Breusch-Mizon-Schmidt estimator shows no dierence in income between organic and conventional farmers, despite higher subsidies and lower costs for organic farmers. Furthermore, using an OLS regression including Ricardian theory and residential rent determinants, it is demonstrated that organic land is sold for the same price as conventional land. This result is conrmed by the Spatial Matching method, showing that organic practice does not in uence the price of land. The article shows that it is necessary to consider whether the land is organic or not when selling agricultural land. Such dierentiation in the market can help to integrate environmental externalities (better soil quality) into the land value. This price increase could encourage land conversion through an anticipated increase in farmers' income. However, at present, the low supply of organic land for sale does not allow this price increase.

Suggested Citation

  • Veron, Emilien, 2022. "Comparative analysis of revenue and land prices between organic and conventional farming," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 320734, Agricultural Economics Society - AES.
    • Handle: RePEc:ags:aesc22:320734
    DOI: 10.22004/ag.econ.320734
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    Keywords

    Agricultural and Food Policy; Farm Management; Land Economics/Use;
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