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A comprehensive description of the recent structure, performance and developments of organic farming in Germany does not exist. Because of this gap the Institute of Organic Farming and the Institute of Farm Economics of the German Federal Agricultural Research Centre (FAL) have carried out an interdisciplinary empirical analysis of the state of the art of Organic Farming in Germany in 2002-2003. In addition to the status-quo-analysis an important function of the study was to establish a long lasting research-organic farming network. Farm economists, organic crop production specialists, organic livestock specialists and sociologists are member of the scientific network. 218 randomly chosen farms throughout Germany have been surveyed in 2002/2003. The survey was carried out with face-to-face interviews including closed, open-ended and open response-option questions. Up to 15,000 variables per farm have been gathered. In this paper the major findings of the survey are described.

Recent food scares have lead to a boom in demand for organic products and an increasing awareness of policy makers of the potential benefits of organic farming. However, policies specifically targeting organic farming support do not remain beyond dispute and a sound justification of these is in great demand. The potential specific contribution of organic farming to the achievement of some of the key objectives of the European Common Agricultural Policy, e.g. competitiveness of agriculture, farming income, food supply, food quality and minimisation of negative environmental impacts of agricultural production are discussed. It is argued that organic farming can contribute to the objectives of the CAP, however, addressing the various objectives to different degrees. The environmental effects of organic farming seem to be largely positive in comparison to conventional farming on a per hectare basis in all categories, be it biodiversity, input-output balances or soil and water resources, although other farming systems might perform better with respect to single indicators or when results are related to the amount of produced output. The quality of organically produced food seems to be higher than that of conventionally produced food for several indicators, for example, the risk of food contamination with pesticides and or nitrate tends to be lower. Income levels from organic farming are on average comparable to income generated on conventional farms, and organic farming is clearly a profitable alternative for quite a few farms in Europe. With respect to rural development organic farming is expected to have little direct effects, e.g. on unemployment rates, although small scale marketing and processing initiatives may contribute directly to rural employment. However, indirect effects such as increased employment in tourism due to a positive “ecological” image of a region can be of importance. Conclusively, organic farming can contribute to several of the declared policy objectives of the CAP. However, the information available to date does not permit a clear conclusion if organic farming achieves desirable effects at lower costs than other farming systems. Nevertheless, the positive effects on a broad range of objectives clearly justifies the support of organic farming and is therefore recommended.

Economic aspects are increasingly determining the acceptance and further expansion of organic farming in Europe. Drawing on data and studies from the 15 EU member states and three non-EU countries (Norway, Switzerland and Czech Republic), this book provides a comprehensive overview of the economic performance of organic farms in Europe. The analysis of yields, costs, prices and support payments offers an insight into the profits of organic farms of various types and in different countries. Specific attention is paid to the impact of the 1992 CAP reform on the profitability of organic farming. This book is aimed at policy makers, the private sector, researchers and students in the field of organic farming.

The financial performance of organic and conventional farming is highly influenced by the EU direct payment policy. While organic farms receive considerable support from agrienvironmental programmes, the design of the first pillar put organic farming at a disadvantage in the past. The 2003 CAP reform has changed this situation particularly by decoupling direct payments and reducing price support. This paper has therefore the aim to identify and assess the impact of the CAP reform on the relative profitability and production structure of organic farms in Germany. The statistical analysis of FADN data from the years 2003/04 and 2006/07 suggests that differences in payments from the first pillar decreased, affecting positively the relative profitability of organic farms. A survey among German organic farmers revealed however that only a minority attributes substantial changes in profits to the CAP reform and decoupling, respectively. The outcomes of this investigation suggest that organic farmers still require more specific information and advice in order to use the new possibilities given through decoupling.