Environmental and economic consequences of large-scale conversion to organic farming in Croatia

Organic farming is a rapidly growing sector both in Croatia and elsewhere. However, there is some concern as to what a widespread adoption of organic farming would bring to society as a whole. The costs and benefits of this development and the associated trade-offs are largely unknown and have hardly been explored. There is a vast body of evidence showing that organic farming in most cases environmentally outperforms non-organic systems. However, organic farming is associated with lower yields and its further expansion might lead to job losses in some other sectors and potentially jeopardise the overall economic strength of a country. This research presents an attempt to assess the environmental and economic consequences of the large-scale adoption of organic farming in Croatia in regard to national agricultural productivity, the labour force and environmental and economic performance. Besides farming the assessment has also taken into account the impact on farm-upstream linked sectors: energy, farm inputs manufacturing, trade, transport and research, education, advisory, veterinary and administrative services. In order to obtain the real value-added of these sectors, their gross value-added has been corrected for the associated environmental costs and public investments. The average annual results of the period 2001-05, representing the baseline, have been compared with fourteen development scenarios with different percentages of agricultural land under organic management, yields and premium prices. All of the organic farming scenarios perform better environmentally than the baseline. The gross and real value-added of the scenarios examined depends on the area under organic management and the yields and premium price achieved. In the case of a total conversion and no premium, in order to ensure the same gross value-added, the average yields have to reach 96% of the baseline, or 85% for the same real value-added