Economic Performance of Conventional, Organic, and Biodynamic Farms

Abstract

Organic agriculture in the Czech Republic is taking on a greater importance: the number of the organic farms is increasing and the a vailability of bio products is rising too. The aim of this study was to evaluate and comp are the economic situation of organic, biodynamic, and conventional farms by using financi al analysis indicators, performance indicators, economic efficiency indicator, and mult idimensional intercompany comparison methods. Furthermore, the subsidies impa ct on farms’ profits, sales, and return on assets indicators by a linear regression model with AR (AutoRegressive 1) process was analyzed. A total of 389 Czech farms re ceiving subsidies from 2007 to 2012 were selected. From these, 273 farms were conventio nal, 112 organic, and 4 biodynamic. Organic farms were the most profitable and got the best results on the economic efficiency indicator and took the first place in th e intercompany comparison. Subsidies worsen the organic farms’ economic situation, howev er, without statistical significance. Biodynamic farms received the highest amount of sub sidies. In some years, these farms did not gain profit. Despite the worst results of e conomic efficiency indicator, biodynamic farms were placed as second in the intercompany com parison. Subsidies improved the biodynamic farms’ economic situation (statistically insignificant) and could play a role as a motivating factor. Conventional farms had the hig hest values of input and output indicators (except profit) and they received the lo west amount of subsidies. Subsidies had a statistically significantly positive effect on th e profitability of these farms, though with a negative effect on sales. Keywords: Agricultural enterprises, Autoregressive model, Eff iciency, Linear regression model, Czech Republic