Management Theory and Studies for Rural Business and Infrastructure Development, Volume 20

Effectiveness of direct support of Lithuanian organic farming

Zenonas Kazakevičius


Organic farming in Lithuania is developing rapidly. Consumer interest about safety of organic
food products and environmental protection is highly correlated with stability and sustainability
of state economy. EU and national support is focused on organic production development
in Lithuania.
Organic farming started since 1993 with 148 ha of land in 9 certificated organic farms. Organic
farming began to grow in 2008, then were registered 2 805 certificated organic farm, included
13 piscicultural farms, structured in 127362 ha of arable land, and presented to 5 percent
of land for direct support payoffs. Average sized organic farm was 43.8 ha in 2008.
Compensation order was applied to warrant gain from production in organic farms, and
since 1997 the support started as direct payoffs and compensations.
Survey consequences cover the fact, that economic production potential of organic and traditional
farming is the same, but high disparities appeared in 2006–2008 as scope of agricultural
production, when in traditional farmers farms were produced 18–40 percent per hectare more of
plant production, and 25–39 percentage more of animal production. The financial gain and variable
costs in organic farming sector in 2006–2008 was 2.5 times less than in traditional plant
production, and 30 percent less than in animal production.
Thus, organic farming in Lithuania till 2008 was detrimental. EU and national support
highly covered the loss in organic agricultural production sector. Direct payoffs for different sized
farms were similar, but compensations were 2.8–2.9 times higher to organic farms comparing
with average traditional farms.
Consequently, national policy was directed to develop and support organic farming in Lithuania.
Exceptional considerations were focused on financial loss of organic farms and overpay
instead of simulated gain.
Direct support was précised as 0.39–0.48 Lt per general agricultural production unit in traditional
farming comparing with organic farming with 2.7 times higher extent.
Coordination of direct support could be perfected in purpose to exceed higher public welfare
in organic farming. New leverages are needed of organic farming stimulation including taxes
under changing activity development strategy to traditional farming, certification image and stimulation
of consumers’ needs to use more expensive organic products.

Keyword(s): direct support, direct payoffs, compensations, organic farming, organic farm

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