Defra - Department for Environment, Food and Rural Affairs.

Science Search

Science and Research Projects

Return to Science Search homepage   Return to Project List

Economics of organic farming - OF0373

The project will support our understanding of the factors affecting the profitability of organic farming and the effects of government policies on the organic sector and public policy goals, by improving the collection and analysis of organic farm accountancy data, and by analysing the data with respect to labour use on organic farms.
Since 1999, organic farming in England and Wales has expanded rapidly, by 2005 accounting for ca. 4% of agricultural land use on 3500 holdings, with 10-20% growth expected in 2006. The market has also grown rapidly, with UK retail sales up 30% in 2005 to £1.6 billion. The decisions of producers to convert or remain in organic farming, transparent price setting procedures in organic food markets and effective policy-making all require good financial data and a soundly-based understanding of the potential impacts of business and policy decisions on producers and the activities they undertake.
The first two project objectives cover annual data collection and reporting on organic farm business performance in England and Wales. Due to the small scale of the organic sector, organic farms are not sufficiently well represented in the main Farm Business Survey at present, therefore some supplementary data collection is required to balance the samples to be analysed. Under a series of Defra-funded projects since the mid 1990s, organic farm business data have been collected and annual reports on the output, costs and income situation of organic farms, and the performance of individual crop and livestock production activities, have been published on the organic statistics section of the Defra website ( This will be continued for a further three years (2005/6-2007/8), with the aim of fully integrating organic farming data collection into the main annual Farm Business Survey as soon as possible after the end of the project. Data from about 100 organic farms already in the Farm Business Survey will be combined with data collected from a further 80 farms. The University of Wales, Aberystwyth will continue to produce annual reports analysing the results for different organic farm types, comparing them with identical samples in the previous year to get an indication of trends, and with similar conventional farms.
The third objective covers the extent, nature and returns to labour use on organic farms. This will be done by comparing sets of data from two recent surveys carried out by Essex and Exeter Universities, with the Farm Business Survey data and with data from the annual June census of agriculture. The intention is to understand better how much labour is used on organic farms, how the labour is allocated to different activities, and how well paid and secure the employment is. Comparisons will be made between different organic farm types, and with conventional farms.
The work will benefit Defra by providing good statistical data to evaluate the effects of policies both on beneficiaries and on public policy goals, and by providing an improved understanding of key issues where policy intervention or adjustments might be required, including the setting of support payments. Conventional producers will benefit through access to data on the financial performance of organic farms and the potential costs of conversion. Existing organic producers will benefit through better understanding of factors influencing their performance, and through improved data on costs of production for use in price setting.
1. To collect farm accountancy data from 46 organic farms in England and Wales relating to the 2005/6 financial year and from 70 organic farms in England and 10 in Wales in each of the financial years 2006/7 and 2007/8.
2. To analyse the data collected under objective 1 in combination with data available from the main Farm Business survey (85-100 useable holdings based on the 2005/6 database) to produce an annual report on organic farming costs, incomes and margins by end July 2007 in the case of 2005/6 data and by end of the March following the end of each subsequent financial year (e.g. March 2008 for 2006/7 data).
3. To investigate the extent, nature and remuneration of labour use on organic farms, drawing on the data from previous studies (see approach for details) covering the period 2000-2005 and to produce a paper suitable for refereed journal publication and a set of standard labour requirement data for organic farm enterprises by end September 2007.
Project Documents
• Final Report : Organic Farm Incomes in England and Wales 2008/09   (1074k)
• FRP - Final Report : defra organic incomes 2010 11 FINAL   (1521k)
• ANN - Annual Report : defra organic incomes 2009 10 (final)   (1590k)
Time-Scale and Cost
From: 2007

To: 2012

Cost: £322,127
Contractor / Funded Organisations
University Wales, Aberystwyth, Organic Research Centre, Farm Business Survey
Arable Farming              
Farm Business              
Livestock Farming              
Organic Farming              
Fields of Study
Organic Farming