ABSTRACT
The financial performance of organic and conventional farming is highly influenced by the direct payment policy of the EU Common Agricultural Policy (Häring and Offermann 2005). While organic farms receive considerable support from agri-environmental programmes, the design of the first pillar put organic farming at a disadvantage in the past. The 2003 CAP reform has changed this situation by decoupling direct payments and reducing price support. In Germany, a transitional decoupling scheme has been implemented in 2005 which will be transferred stepwise into a regional Single Farm Payment (SFP) model by the year 2013. In recent years, a number of studies estimated that the CAP reform could reduce some of the unfavourable elements of the CAP depending on the national implementation of the reform (Offermann 2002, Offermann and Nieberg 2006, Schmid and Sinabell 2007). Against this background, this chapter aims to identify and assess quantitatively the present impact of the reform on the relative profitability and production structure of organic farms in Germany using bookkeeping records from the German Farm Accountancy Data Network (FADN) as well as results from an extensive farm survey as empirical base.
