Conventional versus organic olive farming: which has a better economic performance?

Abstract

The European Green Deal sets a target of at least 25% of the total EU agricultural land under organic farming by 2030. In the case of the Spanish olive sector, organic olive farming accounts for barely 10% of the national agricultural area dedicated to this crop. Within this context, this study compares the economic performance of Spanish conventional and organic olive farms in terms of productivity, profitability, viability, resilience, and independence. To do so, microdata provided by the Spanish Farm Accountancy Data Network have been used, and matching methods have been applied to conduct an unbiased comparative analysis of matched conventional and organic farms. Results show statistically significant differences in productivity, with conventional olive groves being more productive. However, CAP subsidies are shown to be an effective instrument for promoting the conversion to organic farming in olive groves since they cancel out the differences in profitability between these two production systems. There is also evidence of the greater resilience of organic farms. These results could contribute to a more efficient design of instruments promoting the ecological transition of agriculture in line with the aforementioned policy objective.