A CRITICAL VIEW ON DIRECT AREA PAYMENTS TO ORGANIC VEGETABLE PRODUCERS

Although direct payments are an important policy instrument to support farmers in conversion to organic farming methods, a discussion has started in many countries about pros and cons and the amount of these payments. The objective of this paper is to explore differences in costs and benefits between organic and non-organic farming practices in a broad sense. Besides direct costs and benefits at crop level, which are commonly seen as the basis for direct payment, other less visible costs such as transaction costs and risk increase are considered and translated to cost components at farm and/or crop level. Where possible they were quantified in monetary units in order to examine the possibility to integrate them in direct area payment schemes. For each of the factors, a time dimension is taken into account, the transition and the organic period. At the end, the critical question is posed, whether direct support schemes are the best way to compensate individual farmers for these additional costs. In the paper evaluations are made for field vegetable production in Flanders (Belgium).
The cost/benefit analyses in the strict sense shows low evidence for direct payment systems. After the transition period, this traditional basis for direct payment schemes will mostly be positive. The cost-benefit balance at crop level is only negative during the transition period, thus a direct payment scheme is only justified during that period. However, the required support payment level to balance this negative cost-benefit level is high. On the other hand the less visible components such as transaction costs and risk show much more evidence but are more situated at farm level than at crop level. In this context other policy instruments will be much more efficient as alternative or supplementary to generic direct area payments.