Can Organic Producers Compete? A study of Organic Agriculture in Sweden

Abstract

This paper studies profits in the organic agricultural industry, in order to see if the increase in the demand for organic produce over the past 10 years has had any impact on the premiums achieved for organic production. Several types of products were studied; mixed farming, several types of horticultural products, as well as some farms dealing mainly in husbandry. The general result is that while organic producers receive price premiums, these only seem large enough to cover the extra costs of organic production. Premiums were also in general found to be stable over time, but for some products were increasing/decreasing. The results obtained here seem to be consistent with developments in the market, and similar to related studies. This implies that, as was done in 2008, some extra reforms may be necessary if it is desired that Swedish organic agriculture continue developing. Increased subsidies may be an important driver, as profits for organic producers are not high enough to attract new producers by themselves.