Abstract

To date, the process of conversion to organic farming has been analysed as a choice between only two alternatives, conventional versus organic farming. However, the conversion process in the EU is a twotier decision, which brings the possibility of a nested structure between mixed and organic farming. In the context of Sweden, where the conversion investment is flexible, we attempted to identify economic determinants of the organic conversion process. For that purpose, we applied the nested Logit random utility maximisation (NLRUM) model to data from the Swedish farm accounting data network for 2002-2012. The analysis showed that milk prices, milk yield and environmental support payments play a significant role in the organic conversion process. As expected, a decrease in conventional milk prices would induce conventional farms to convert to organic production. The scale of conversion to organic farming was more pronounced among dairy farms located in regions with higher environmental support payments, and in regions endowed with more pasture land and leys.

Keywords

mixed farming; nested logit model; organic dairy; Sweden

Published in

German journal of agricultural economics
2018, Volume: 67, number: 1, pages: 14-30

SLU Authors

• Basnet, Shyam Kumar

  • Department of Economics, Swedish University of Agricultural Sciences
    

• Manevska Tasevska, Gordana

  • Department of Economics, Swedish University of Agricultural Sciences
    

• Surry, Yves

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Economics


Permanent link to this page (URI)

https://res.slu.se/id/publ/94015