Assessing the Profitability of Converting to Organic Farming: Key Parameters to Analyse

摘要

A substantial number of conventional farmers consider converting to organic agriculture due to the rapidly growing market for organic products and the possibility of higher prices. However, they are also aware that organic farming may entail some constraints and possibly higher costs, and are therefore unsure whether they will be economically better off if they convert. The economic and financial evaluation method may help them make scenarios to assess the profitability of converting to organic farming. The three indicators used by this method are the Net Current Value, the Internal Rate of Return and the Recovery Period. An example of the application of this method is given in a case study carried out for FAO by the University of Valencia comparing the profitability of organic and conventional citrus production in Spain.