Modelling Organic Farming at Sector Level - An Application to the Reformed CAP in Austria
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We analyse whether the 2003 CAP reform and the anticipated new program of rural development will lead to an expansion or a reduction of organic farming. An extended version of the Positive Mathematical Programming (PMP) method is developed in order to differentiate organic farming from conventional and other agri-environmental management practices in a sector model. Austria is chosen for the case study because 8 % of its farmland are managed organically, and detailed data on alternative management practices are available. The results suggest that the recent agricultural policy reforms will make organic farming more attractive for farmers, given the price premiums relative to conventional products will remain at observed levels.