The Comparative Cost and Profit Analysis of Organic and Conventional Farming

Urfi, Péter and Hoffmann, András and Kormosné Koch, Krisztina (2011): The Comparative Cost and Profit Analysis of Organic and Conventional Farming. Studies in Agricultural Economics, 113 (1). pp. 67-84. ISSN 1418-2106

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Abstract

The cost-profit relations of organic and conventional farming were examined on the basis of natural and financial data of a large agricultural - company in western Hungary and of economic models characterising private farms in eastern Hungary. The differences in cost structures reflect variable conditions relating to certain crops, but they can be well explained by the differences in the technologies used. According to the production data, in organic farming direct costs per hectare were lower in all of the four examined crops. Even cost per production unit and contribution were more favourable in three of the investigated crops. Regarding the calculation done by economy models, the costs per hectare relating to the two production methods were not significantly different. Yields in organic plant production were typically lower but costs per unit and selling prices were higher. Differences in gross profits may be explained by different yields and selling prices. In a majority of the model variations organic farming is more profitable, but the extra bio price ensuring this, in accordance with trends from literature, is not sufficient for achieving a higher profit in every year.

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