From conventional to organic in Romanian agriculture

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ContentslistsavailableatScienceDirect

Land Use Policy

j ou rn a l h om ep a ge : w w w . e l s e v i e r . c o m / l o c a t e / l a n d u s e p o l

From conventional to organic in Romanian agriculture – Impact assessment of a land use changing paradigm

Andrei Jean Vasile

^a,∗

, Cristian Popescu

^b

, Raluca Andreea Ion

^c

, Iuliana Dobre

^c

aPetroleum–GasUniversityofPloiesti,B-dulBucuresti,No.39,100680Ploiesti,Prahova,Romania

bUniversityofBucharest,FacultyofAdministrationandBusiness,36-46,M.Kog˘alniceanu,Sector5,Bucharest,Romania

cBucharestUniversityofEconomicStudies,FacultyofAgro-foodandEnvironmentalEconomics,6,PiataRomana,Sector1,Bucharest,Romania

a r t i c l e i n f o

Articlehistory:

Received23November2014

Receivedinrevisedform7February2015 Accepted20February2015

Keywords:

Organicfarming Landuse Efﬁciency Farmconversion Supplementarypayment

a b s t r a c t

Arguingorganicvs.conventionallanduseisbroadlydiscussedinresearchpapers,politicaldiscourse, andevenmorepracticalissuesatfarmlevel.Inmacroeconomicapproach,thedilemmaisthatintensive agriculturethatutilizeslargequantitiesofinputsmadeitpossibletogrowenoughfoodtomeetthecur- rentglobalneeds,butthiswayoflanduseleadstoenvironmentaldamageanddegradationofecosystem services.Inmicroeconomicapproach,thedilemmaiswhetherismoreprofitableforafarmtoconvert conventionalcropstoorganicones.Thisarticleaimstoundertakethisapproachwithrespecttoonecase studycarriedoutinNorth-WestRomania,toafarmof450haofcereals:wheat,corn,sunflowerandsoy- beans.Itsconclusionsmaynotberepresentativeforallorganicconversions,butthefindingsarerelevant atatimeofdebateoverchanginglanduseandcropsstructureoffarms.Thestudyindicatesthatthe economicefficiencyisslightlyhigherinorganicsystemcomparedtoconventional.Theattractiveness ofthesectormadefarmerstoconvertpartoftheirlandtoorganicfarming,asshownthestatisticsof acceleratedgrowthofareaunderorganicfarminginthelastyearsinRomania.

Introductionandbackground

Organicfarmingisaformofagriculturethatusesfertilizersand pesticides(whichincludeherbicides,insecticidesandfungicides) iftheyareconsiderednatural(suchasbonemealfromanimals), butitexcludesorstrictlylimitstheuseofvariousmethods,includ- ingsyntheticpetrochemicalfertilizersandpesticides;plantgrowth regulatorssuchashormones;antibioticuseinlivestock;genetically modiﬁed organisms;etc. (EuropeanCommission, 2014).Conse- quently,itreliesontechniquessuchascroprotation,greenmanure, compost,andbiologicalpestcontrol(EuropeanCommission,2014).

Accordingto Gold (2007),the USDA NationalOrganic Stan- dardsBoarddeﬁnesorganicagricultureasanecologicalproduction managementsystemthatpromotesandenhancesbiodiversity,bio- logicalcyclesand soilbiologicalactivity.Itisbasedonminimal useofoff-farminputsandonmanagementpracticesthatrestore, maintainandenhanceecologicalharmony.

Thisarticleaimstoinvestigatewhetherismoreproﬁtablefor afarmtoconvertconventionalcropstoorganiconesincontextof thenewinlandagriculturalparadigmchanges.Inthiscontextthe

∗Correspondingauthor.Tel.:+40721146587;fax:+40721146587.

E-mailaddress:andreijeanvasile@yahoo.com(A.J.Vasile).

leadingargueofthecurrentresearchistoestablishtheoptimal areaconvertedunderorganicwheatthatbringstheoptimalproﬁt forfarmer.

Inordertoachieveanswertothesequestions,acasestudyis carriedoutinNorth-WestpartofRomania,inSatu-MareCounty, forafarmof450haofcereals,mainlyconsistsof:wheat,corn,sun- flowerandsoybeans.Startingfrompreviousframeworkas(Gruia, 1998;Rusuetal.,2005;Subicetal.,2010;Dobreetal.,2011;Turek- Rahoveanuetal.,2011;ManescuandDobre,2012;Sopronietal., 2012;Andreietal.,2013)carriedoninordertotestandconfirming theviabilityofagriculturalinvestmentsfordiversifyingthevalu- ingofinlandagriculturalpotential,inthisresearchitwasdeveloped andadaptedamethodologyfortestingtheeconomicefficiencyof convertingtheconventionalagriculturalproductionsstructuresto organic.

The assessment of themain economic indicators for under- standingtheorganicfarming efﬁciency againstto conventional agricultural systems was developed among time in numerous researchesas:(Girardinetal.,1999;Rigbyetal.,2001;Vander WerfandPetit,2002;Halbergetal.,2005;Halberg,2012).Forestab- lishingtheopportunityandtheadvantageousnessofconventional farmingtoorganicconversionsomeof themostrepresentative indicatorswerecomputedandanalyzed.Sointhisstudy,theefﬁ- ciencyoffarm’seconomicalactivitywasestimatedbycomputing http://dx.doi.org/10.1016/j.landusepol.2015.02.012

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a range of representative indicators, as: technical endowment, labourproductivity,averageand total production,total andper hectarerevenuesandexpenditure,structureofcosts,totalandper hectareproﬁt,rateofreturn.Theseindicatorsarerepresentative forthefarmunderanalysis,becauseithasassociativeformand, assuch,itcanbeconsideredasenterprise,inthoseregardingthe marketrelationship,accountingsystem,workforce,functionaland operationalmanagement.Ascomparison,inliteratureaspectsas modellingtailbehaviourofreturns(Makhwitingetal.,2014)or analysisregardingtheevidenceandsourcesofmomentumproﬁts (MisraandMohapatra,2014)areoftenusedforinimplementing thebusinessdecision.

Inrecentyears,numerousstudiesreferringtoconventionalcon- versiontoorganicfarminghavebeencarriedout,withdifferent outcomes.Patiletal.(2012)comparedtheeconomicandenviron- mentalsustainabilityofconventional agriculturalactivitieswith organicagriculturalactivities.Thestudyaddressesthedifferences betweenconventionalfarming andorganicfarmingactivitiesin termsofeconomic(i.e.yields,inputcosts,netreturns)andenvi- ronmental(i.e.nutrientloss,nutrientbalance,wateruse,biocide index)indicatorsintworegionsofIndia.Themainresultsshow thatorganicfarminghaspotentialtoincreasenetreturns,reduce therisksofcropfailureandreduceenvironmentalimpacts.How- ever,theseadvantagesareshowntobesite-dependentandorganic farmingmightleadtosoilnutrientdepletionanddecreasingyields, ifthelivestockdensityandmanureproductionisinsufficient.Karali etal.(2011)presentanovelapproachtotheanalysisofruralland use/coverchangethatintegratesagent-basedmodelswithamulti- phasesocialsurvey.Thestudy(Karalietal.,2011)underlinesthe humandimensionoflanduse;findingsfrommodel’sapplicationto afarmingareainSwitzerlandareusedasanillustrativeexampleto supporttheargumentfortheneedtoobtaininsightsintohuman decision-makingprocessesandtheircomplexinteractionswiththe locale-specificenvironment.

In anotherstudy,Goewie (2002) revealsthechallenges that organicsectorcurrentlyfacesandtheopportunitiesandthethreats thatareexpectedtoconfrontorganicproduction inthecoming years.In theauthor’sreasoning, thesuccessof organicproduc- tionis basedonproducerswhoare wellmotivatedabouttheir rolesinsocietyatlarge.Theseproducersneedtobeempowered andthereforeenabledtoputtheirholisticviewsintopractice,and showastrongwillintermsoforganizingtheirknow-howandsup- portinginformationnetworksaccordingtotheirowncriteria.The futuresuccessoforganicagriculturewillbedeterminedaboveall byconsumerdemands.Inanotherstudies,researchers(Morganand Murdoch,2000)examinethedistributionofeconomicknowledge withintwofoodchains:theconventionalfoodchain,whichrelies onintensiveinputsintothefoodproductionprocess,andthustends todistributeknowledgetowardsinputsuppliers,andtheorganic foodsupplychain,whichdistributesknowledgebacktowardsthe farmasfarmersmustrelocalisetheirunderstandingsoftheproduc- tionprocess.InapreviousresearchCobbetal.(1999)studiedthe changesinsoilconditions,biodiversityandsocio-economicwelfare linkedtotheconversionfromnon-organictoorganicproduction.

Themainfindingsshowthattherearedefiniteenvironmentaland economicadvantagesarisingfromorganicagriculturethatarenot fullyreflectedinthepresentpatternofagriculturalincentivesin UK.Thestudyalsoshowedthatvariationsinfarmmanagement practicestronglyinfluencethenotionofon-farmandoff-farmenvi- ronmentalconsequences. On theotherhandVidalet al.(2013) studiedagriculturalefficiency,comparingorganicwinefarmswith conventionalones.

Inliterature,numerousstudieshavereviledtheadvantagesof promotingorganicagriculturein valuingtheinland agricultural potential.AsPretty(1995),Singh(2000),Altieri(2002),Rasuland Thapa(2004),Bengtssonetal.(2005),andEickhoutetal.(2007)

argue notonlythemostvisible advantagesof theorganicagri- culturecouldbehighlighted:conservingsoilandwaterresources, improvingsoilandwaterquality,enhancingdiversity,sustaining yield,producing qualityproducts,naturalpestcontrol withless environmentalpollution,butalsonumerousdisadvantages:labour intensive, needsconstantattentionand skills,needsabundance ofnaturalinputmaterial,andintransitionperiods(twoyearsfor arablecrops)oftenyieldreductionsoccur(Prasad,2005).Debates organicvs.conventionalarediscussedinwhatfollows.

Worldwide, theorganicvs.conventional farminghad gener- atedgreatdebates.Ontheonehand,Smil(2000)considersthat intensiveagriculturethatutilizeslargequantitiesofinputsinthe formoffertilizers,pesticide,labourandcapitalmadeitpossibleto growenoughfoodtomeetthecurrentglobalneeds.Ontheother hand,thesepracticesmadeagricultureamajordriveroflanduse change(GoldewijkandRamankutty,2004;UNEP,2005),leadingto environmentaldamageanddegradationofseveralecosystemser- vices.ThemaingoalexpressedbyUnitedNationistomeetthefood demandsofagrowingpopulationtoachieveMillenniumDevelop- mentGoals(MDGs)by2015thatincludetheeradicationofhunger (UN,2005)andyetmaintainandenhancetheproductivityofagri- culturalsystems(UN,1992).Itseemsthatfoodsecurityandorganic farmingdrivetototallydifferentlanduses:oneisintensiveandthe otheroneisextensive.

Conventional farming is the model of intensive or produc- tivist agriculture, issued in 40, withits main features (Morgan and Murdoch,2000):economicand strategic rationale,political commitmentandadministrativeauthority,technologicalinnova- tionaimedatincreasingoutputandproductivity.Farmerswere expectedtomaximizeefﬁciencyandmaximizevaluefortaxpay- ers’money.Thekeywordinconventionalagricultureisefﬁciency, asaresultofhighyieldduetohighallocationoffactors:machiner- ies,pesticides,fertilizers,selectedseeds,etc.Withthewidespread useofchemicalshowever,therelationshipbetweenthefarmand thelocalecosystemwastosomeconsiderableextentdisrupted.

Largely, productivityis achievedduetotheuseofchemicalsin combatingbothweedsandpestsandinfertilizingthecrops.But chemicals’useharmsenvironmentand ecologicalsystems,and, furthermore,humanhealth. Thesearethereasonswhy organic farmingbecomesanalternativetotheconventionalone.

“Organic farming is considered a remarkable phenomenon, becauseitoriginatedwithoutthesupportofgovernment,scien- tiﬁcinstitutions,extensionservicesorspeciallegislation.Fromthe outset,organicproducerswerepeopleactinguponaninnerurge, passion,courage,perseveranceandteamspirit.Alreadyatanearly stagetheysawdisadvantagesintheuseofsyntheticchemicalsand thereforemaintainedtraditionalmethodssuchascroprotationand organicmanuring–methodsthat theyconsideredtrustworthy”

(Goewie,2002).

Organicagriculturegeneratesmanyadvantages(environmental,social and economic) associated witha changeof direction towardsamoresustainableagriculturalfuture(Cobbetal.,1999) andwithfoodhealthandsafety(Dyson,1996).Itisbasedoncrops’

rotationanditfollowstherhythmsofnature.

Inthisresearch,organicagricultureisconsiderasonevariantof sustainableagricultureandnottheonlypossiblesubstituteforcon- ventionalfarming,becauseatotalconversionofafarmtoorganic agricultureputspressuretoproﬁtability.

Increasing concerns about food security in least developed and developing countries require a wide range of sustainable agriculturalpractices(combiningsomeorganicandconventional practices) to fulﬁl the food demand of a growing population (Ericksenetal.,2009).Therearesomecharacteristicsoforganic farming that make it anadvantageous directionof land use:it offersgreatpotentialtodeveloplowcost,lowinput,locallyavail- ableeco-technologiestoproducefoodandﬁbber(Badgleyetal.,

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0 2000 4000 6000 8000 10000 12000 14000 16000 18000

2006 2007 2008 2009 2010 2011 2012

Number of firms registered in organic agriculture

Fig.1.EvolutionofﬁrmsactivatinginorganicagricultureinRomania,2006–2012.

Source:Basedon(MARD,2014).

2007),withoutcausingdamagetohumanhealthandtheenviron- ment(UN,2008).Anotheradvantageousfeatureisthatthistype ofecologicalknowledgecanbeeasilytransferredtosmall-scale farmsinleastdevelopedanddevelopingcountrieswheretheneed ismuchhigherduetonon-availabilityofotherhighinputandcostly resources(Sandhuetal.,2010).

PolicymeasuresforpromotingorganicfarminginRomania

Agriculturalpoliciescontaininstrumentsfor enhancingfarm sustainabilityandpromoteorganicproduction.ThenewEuropean agriculturalframework2014–2020developsamassivechangeof paradigms, including organic and sustainable agriculture. As it wasarguedinpreviousstudies(AndreiandDarvasi,2012;Andrei andDusmanescu,2012),valuingtheinlandagriculturalpotential requiresanintegrativeapproachtomassiveissuesstartingtorural tourism(Andrei etal.,2014), or approaches regardingthefood securityanddevelopingthesustainableagriculture(Istudoretal., 2014)andfarmers’perceptiononpatientprotection(Boubacarand Foster,2014)orrevilingmodelsofeconomicgrowth(Gheorghe, 2014).

TheEuropeanUnioniscommittedinprincipletopromotingsus- tainableagricultureinitsCommonAgriculturalPolicy(CAP).This isoneobjectiveoftheArticles2and3coftheTreatyofAmster- dam(Haigh,1998).TheserequiretheEuropeanUnionto“promote harmonious,balancedandsustainabledevelopmentofeconomic activities...a high level of protection and improvement of the qualityoftheenvironment(Article2)”,andthat“environmental protectionrequirementsmustbeintegratedintothedeﬁnitionand implementationofcommunityactivitiesandpolicies,inparticular withaviewtopromotingsustainabledevelopment”(Article3c) (EuropeanCommission,2010)

AsmemberstateoftheEuropeanUnion,Romaniaimplements the Common Agricultural Policy and, as such, the principle of promotingsustainable agriculture. The latter involves not only higheconomicaloutputs,butalsoenvironmentalandsocialissues.

Therefore,speciﬁcmeasuresandsubsidiesforencouragingorganic farmingareprovided.

AccordingtoEuropeanUnionandnationallegislation,thetran- sition from conventional to organicproduction passthrough a period named conversion. RegulationCE834/2007, in art.2 (h) deﬁnes“conversion”as“transitionfromconventionalagriculture toecologicalinaperiodoftimeinwhichprovisionsoforganicpro- ductionareapplied”.Alsointhesamedocumentitisspeciﬁedthe periodofconversion¹forannualcropsistwoyears.

1 AccordingtoArt.17,oftheRegulationCE834/2007,theprocessofconversionto organicagriculturemeans(...)abandonmentoftheapplicationofchemicals,farms’

Romania,asmemberstateoftheEuropeanUnion,benefitsof EuropeanFundsof4,098,000DthroughtheEuropeanAgricultural GuaranteeFund.Thefinancialallotmentsaredistributedamong thepotentialbeneficiariestakingintoaccountboththetypeofthe farmandtheareaconvertedintoorganic,byusingcertaincrite- ria.Amongthesecriteriaandinaccordancetoinlandregulations (GovernmentalDecisionno.759/2010),thefarmsofvegetal and animalproductionreceivespecificaids,iftheyareregisteredin organicagriculturesystemandiftheirfarmsareintheperiodof conversionfromconventionaltoorganicagriculture.Inthiscon- text,theaidallotmentsvary byfarm sizeas: 0.30–5ha,540D; 5.1–20ha,611.43D;andforareasabove21hatheaidis510D.The CAPandinlandfinancialallotmentsupporthasamajorimpactin increasingtheorganicagriculturepotentialinattractingnewpro- ducersandconversingclassicalagriculturalareastoorganicones.

Inthiscontext,mentioningtheﬁnancialsupportamountsandfarm characteristicsisrelevantincarryingoutthisresearch.Alsothese instrumentsaretakenintoconsiderationinthecasestudy,when elaboratingscenariosofconvertingthefarmfromitsconventional systemtotheorganicone.

CurrentstatusoforganicagricultureinRomania

Organic farming emerged in Europe as a result of diseases caused by products containing contaminants (dioxin, thread- worms,Salmonella,E.coli,etc.)andoflackoftrustofpopulationin measuresregardingfoodsafety.Asmoreepisodesofillnesswere causedbytechnologiesofintensiveindustrialproductionbasedon over-fertilizingagriculturalland,byusingstimulators(antibiotics, hormones,etc.)inanimalnutrition,anewapproachemerged.It hasturnedintoamovementinEurope,andworldwide,toobtain agriculturalproductsthroughenvironmentalfriendlymethodsand foodproductsthroughcleantechnologies.

Thebasicideaoforganicproductionishighqualityofnatural products.Qualitystandsfortheﬁrstplace,whilequantityandyields occupysecondaryplaces.Loweryieldsoforganiccropsarecompen- satedbyhigherpricesoforganicproducts,resultinginconsumers’

willingnesstopaymoremoneyforsaferandnaturalproducts.

Thebusinessesseemedtobeproﬁtable,thusspecializedpro- ducersbegantoemergeinRomania.Fig.1showsthatthenumber of ﬁrms registered in organic agriculture in Romania sharply increasedfrom2006to2012,from3409operatorsto15,544oper- ators(4.55times).Thisdynamicdemonstratestheattractiveness oforganicsectoranditspotentialofdevelopment,inthecurrent

adaptationtothenaturalbiologicalcircuitofvegetaland/oranimalproduction, investmentsforchangesandadjustments.

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0 50000 100000 150000 200000

2006 2007 2008 2009 2010 2011 2012

- ha -

Area under organic agriculture, arable crops

Area under organic agriculture, permanent crops: pastures and hayfields Area under organic agriculture, permanent crops: orchards and vineyards

Fig.2.EvolutionoftheareaunderorganicagricultureinRomania,2006–2012.

Source:Basedon(MARD,2014).

stageofRomanianagriculturetransformationsforachievingper- formances.

Worldwide,almost31millionhectaresareusedfororganicpro- duction(practicedinover633,890farms)representing0.7%oftotal agriculturalland(Ion,2011).Sevenofthetoptencountriesofthe world,rankedbypercentage ofagriculturallandworkedinthe ecologicalsystem,istheEuropeanUnion.Asseeninofﬁcialpub- licationsofEuropeanCommission(EuropeanCommission,2010),

“in2008itisestimatedthattherewereabout197,000holdings involvedintheorganicsectorintheEU-27,i.e.2.9%ofallhold- ingsintheEU-15(comparisonwiththetotalnumberofholdings in2007accordingtotheFarmStructureSurvey)butamere0.6%

intheEU-12(wherethetotalnumberoffarmsislargelyinﬂated byverylargenumbersofsmallfarms,inPolandandRomaniain particular)”(EuropeanCommission,2010)(Fig.2).

InRomania,theareaunderorganicagriculturecultivatedwith arablecropsincreased3.8timesfrom2006to2012,from45,605ha to174,644ha.Thetotalareaofarablelandis9,352,000ha(NIS, 2012).Theshareoforganicarablelandintotalarablelandis1.86%, lessthantheaverageshareinEuropeanUnioncountries,where,in 2008,theareaunderorganicfarmingaccountedfor4.3%ofutilized agriculturalareaintheEU-27(EuropeanCommission,2010).

Pasturesandhayﬁeldsunderorganicfarming doubledinthe periodanalyzed,from51,200hato105,835ha.Thetotalareaunder pasturesandhayﬁeldsis4,831,200ha(NIS,2012),theorganicsys- temaccounting for 2.2%. The areaunder organicfarming with orchardsandvineyardsincreasedfrom294hain2006to7781ha in2012(26times).Thetotalareaunderorchardsandvineyardsis 407,400ha,organicsystemrepresenting1.9%.AsitisinFig.1,the numberofspecializedproducersincreased.Theyofferdistinctly labelledproducts,tradedathigherprices.

As a result of data analysis, in Romania, organic sector has insigniﬁcant weight in agro-food system, in those regarding

agricultural area. However, accelerated growth of area under organicfarminginthelastyearsshowsthehighpotentialofdevel- opmentorganicbusinessesinRomania.Theattractivenessofthe sectormadefarmerstoconvertpartoftheirlandtoorganicfarming.

Takingintoaccountalltheconsiderationsabove,agriculturemust provideenoughfoodtofeedthegrowingworldpopulation,butit needsnewmechanismsandpoliciestomaintainandenhancefarm- ingsustainabilitywithoutcompromisingyields.Suchmeasuresand instrumentsarediscussedfurther.

Materialandmethods

In this research it was considered a Romanian agricultural farmfromNorthwestRegionwhichhasunderexploitation452ha ofagriculturalareawithmainobject ofactivityproductionand marketingofgrainandoilseeds.Foranalyzingtheefﬁciencyofcon- ventionalfarmandtheperspectiveofconversiongraduallyanarea of20hatoorganic,threescenarioshavebeendeveloped.Thefarm hasbeenchosenforresearchbecauseithasamajorinﬂuencein localcommunity,highdegreeoffarmtechnicalendowmentand appropriatestructureofproduction.

In this case, thefarm hasthe wholeagriculturalmachinery neededfor developing agriculturalservices:two harvesters,six tractors,one seeder,andone sprayer,ploughand combinehar- vester.Theaverageareapertractoris113ha.Workforceconsistsof tenpersons,ofwhichtwoinmanagementandeightinproduction.

Thelabourproductivityis47,784D/person,in2013.Asconcerning thestructureofproduction,thefarmhasarelativelysimplestruc- tureconsistingincerealsandoilseeds:wheat,maize,sunﬂower, andsoybeanforwhichthelandallocationisshowninFig.3.

Taking into account the crops’ shares in total area, cereals accountfor81.6%andoilseedsfor18.4%.Thestructureiswellbal- anced,iftherationaluseofland(intermsofachievingcroprotation,

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Wheat Maize Sunflower Soy bean

2011 2012 2013

Fig.3.Evolutionoflandcrops’allocation,2011–2013.

Source:Authors’owncomputationbasedonﬁeldresearch.

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0 1000 2000 3000 4000 5000 6000 7000 8000 9000

2011 2012 2013

- kg/ha-

Wheat Maize Sunflower Soy beans Fig.4. Evolutionoffarmaverageproduction,2011–2013(Kg/ha).

especiallytherequirementsofpracticingorganicfarming)iscon- sidered,andeconomic factors(highdemandfortheseproducts) andsocialones(representedbythefactthatRomanianhaslong traditioninthecultivationofcerealsandoilplants).

Asregards theaverageproduction, significantresultscanbe noticed (Fig. 4). Both cereals and oilseeds have higher yields, comparedtothenationalaverage.Forexample,in2012,thelaststa- tisticalyear,thenationalaverageyieldforwheatis2.6t/ha(MARD, 2014),andthefarmachieved4.6t/ha.Moderateinflexionsinpro- ductioncanbenoticed,buttheyarenotsignificant,exceptmaize, in2013,when yieldis much more belowthelevel obtainedin 2011and2012(4t/hacompared to7.8t/ha,respectively7t/ha).

Asregardstotalproduction,itincreasedtowheatanddecreasedto maizeandsoybeans.Thedominantcauseofproductionoscillation isareacultivatedandnotyieldsforeachcrop.

Productionfactors(inputs)havebeenpurchasedfromoutside thefarm:chemicalfertilizers,pesticides,fuelsandseed.Theirusein theproductionprocessgeneratessigniﬁcantvariablecostsaffect- ing the overall level of production cost and total expenditure.

Considering the natureof thefactors of production, the struc- tureoftheirexpenditurewasmaintainedduringtheperiodunder analysis:35.7%chemicalfertilizer,pesticide14.5%,fuels27.6%and seeds22.2%.Besidesthese,thestructureofexpendituresincludes:

expensesoflabour(13.6%forwheatcrop,15.9%formaize crop, 8.5%forsunﬂowercropand16.7%forsoybeancrop),rentexpenses (17.8%wheat,11.2%formaizeand7.9%forsunﬂower).

Consideringthetypeofcrop,thestructuralspendinghasdif- ferentweights:39.1% wheat,37.2% maize,19.1% sunflowerand 4.6%soybean.Totalexpenditureonfarmlevel tendtoincrease, resultingofinputpricegrowth,whichisevidentforRomanianagri- culture,wherelackoforganizationalsupportisidentifiedupstream tofinanciallysupportfarmers.

Thefarmrevenues,generatedfromthesaleofgrainandoilseed crops,haveoscillatorytrendbyproduct,determined,mainly,by thesellingpricevariation.Thesamesituationforthewholeactivity

canbenoticed.Byproduct,importantcontributionshavecereals, whoselargearea(extensivecharacter)andrelativelyhigherpro- ductioncomparedtooilseedhaveledtoahighersharein total income(Table1).Economicalresults,bycropsandindynamic,are presentedinTable5,thebudgetofrevenuesandexpenditure.Sig- nificantvariationofrateofprofitcanbenoticed.Thisisaresultof marketinstability,asreferstopricesandsupplyanddemandbal- ance.In2013,theeconomicactivityrecoversandresultsseemto strengthen.Forassessingeconomicalefficiencyofthenewstruc- tureofproductionthatincludesorganicwheat,therevenuesand expenditureperhectareareneeded.Previousresearch(Manescu andDobre,2012)showsthatexpenditureperhectarefororganic wheatare1000D/ha,andrevenuesperhectareare1100D/ha.It resultsalevelofprofitof100D/ha.Also,revenuesandexpendi- turesforcropsthatfarmeralreadycultivatesmustbeconsidered forassessingeconomicefficiencyofthenewstructureofproduc- tion.Expenditureandrevenuesperhectarehavebeencalculatedas simplearithmeticaverageoftheirlevelsintheperiod2011–2013, because,asshowsotherstudies(Sopronietal.,2009),onesingle yearisnotrelevantforeconomicresultsinagriculture,aslongas yieldsaresignificantlyinfluencedbyweatherconditionsandprod- ucts’pricesand,assuch,farmrevenues,aredependentonmarket demand.

Resultsanddiscussions

Theweaknessesidentifiedinanalysisofeconomicalactivityof thefarmdrivestotheneedofchangingthestructureofproduction, towardsmoreefficientcrops.Furthermore,changesinstructureof productionshouldbemade,consideringtheconversiontoorganic farming.Fordevelopingscenariosofconversion,financialaidspaid bystate,inaccordancewithagriculturalpolicymeasures,shouldbe takenintoconsideration.Afarmerwhodecidestoconvertpartofits areatoorganicfarmingreceivessupplementarypayments,depend- ingontheareaunderconversion.Potentialscenariosofconversion

Table1

Productionsold,pricesandrevenues(t,D/t,D).

Speciﬁcation 2011 2012 2013

Productionsold Price Value Productionsold Price Value Productionsold Price Value

Wheat 681.6 281.8 192,087 830 220.5 182,977.3 745 250 186,250

Maize 1348 143.2 193,009 1265 159.1 201,250 712.5 265.9 189,460.2

Totalrevenuesfromcerealssales – – 385,096 – – 384,227.3 – – 375,710.2

Sunﬂower 105.6 795.5 84,000 162.3 545.5 88,527.27 262.4 454.5 119,272.7

Soybean 124.2 227.3 28,227 58.8 386.4 22,718.18 82 431.8 35,409.09

Totalrevenuesfromoilseeds – – 112,227 – – 111,245.5 – – 154,681.8

Totalrevenues – – 497,392 – – 495,472.7 – – 530,392

Source:Authors’owncomputationsbasedonfarmrecords.

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Table2

Structureofproduction,expenditure,revenuesandproﬁtformodulewith5haoforganicwheat.

Crop Area Expenditure Revenues Proﬁt

ha % D/ha D % D/ha D % D/ha D %

Wheat(conv.) 180 39.8 990 178,200 38.3 1039 187,020 35.8 49 8820 15.3

Wheatorganic 5 1.1 1000 5000 1.1 1100 5500 1.1 100 500 0.9

Maize 184 40.7 929 170,936 36.8 1065 195,960 37.5 136 25,024 43.3

Sunﬂower 46 10.2 2079 95,634 20.6 2302 105,892 20.3 223 10,258 17.8

Soybean 37 8.2 415 15,355 3.3 771 28,527 5.5 356 13,172 22.8

Supplementarypayment 540

Total(aftertheﬁrsttwoyearsofconversion) 452 100 – 465,125 100 – 522,899 100 – 57,814 100

Total(intheﬁrsttwoyearsofconversion) 460,125 517,939 57,814

Source:Authors’owncomputations.

Table3

Wheat(conv.) 175 38.7 990 173,250 37.2 1039 181,825 34.8 49 8575 14.8

Wheatorganic 10 2.2 1000 10,000 2.1 1100 11,000 2.1 100 1000 1.7

Maize 184 40.7 929 170,936 36.7 1065 195,960 37.5 136 25,024 43.1

Sunﬂower 46 10.2 2079 95,634 20.6 2302 105,892 20.2 223 10,258 17.7

Soybean 37 8.2 415 15,355 3.3 771 28,527 5.5 356 13,172 22.7

Supplementarypayment 611.43

Total(intheﬁrsttwoyearsofconversion) 455,175 512,815 57,640.4

are5ha,10haand20ha,becausethesupplementaryaidsreceived byfarmersvarywithintheseranges.Theareasabove20hahavenot beenconsidered,becausehigherproductionoforganicwheatneeds tobesoldonamarketwhichisnotenoughdevelopedinRomania andwherethefarmerdoesnotholdcommercialrelationshipswith potentialclients.Thisisthereasonwhymorethan20ha,and,as such,almost44toforganicwheat,seemstoberiskytoconsider.

Duringtheresearchthree scenarioshavebeendeveloped,as follows.Firstscenariotakesintoaccountconversionto5haunder organicwheat(Table2).The5haagriculturallandistheupper limit ofthe range where farmers receive540D forconversion.

Thesecondscenariotakes10haunder organicwheat(Table3).

The10haagriculturallandisthemiddle ofthesecondrangeof thesupplementarypaymentof611.43D.Consideringthethirdsce- nario,20haofwheatis convertedfromconventionaltoorganic production(Table4).20haistheupperlimitoftherangewhere farmersreceive611.43D forconversion.Thethreescenarioshave beendeveloped startingfrom thefollowingcommonelements:

introductionoforganicwheatwithinthestructureofproduction, totalexistingareaoffarm,maintenanceofothercultures inthe structure,income,expenditureand,obviously,proﬁtperhectare.

Whatdistinguishesthemare:shareoforganicwheatintotalarea, anditsrelatedadditionalpayments,andeconomicresultsobtained duringandaftertheconversionperiod.

Economicefﬁciencyoffarmintheﬁrsttwoyearsofconversion andafterthetwoyearsofconversion

Theeconomicresult(proﬁtrateinparticular)hasbeendeter- minedbythesize(modulesize)forwhichtheforecasthasbeen madeandthestatesupportforcreatingorganicfarmsorplotsof landtransformationthroughtheapplicationofgreentechnologies.

Summarizing,theratesofproﬁtforscenariosconsideredbeforeare presentedinFig.5.

Theeconomicefﬁciencyoffarminitsnewstructureshowslin- eargrowthrateofproﬁt.Thegrowthisanalyzedinseveralways:

(i)Forthesameperiodandbetweenperiodsofconversionandper moduleofsize;

(ii)Economicresultsobtainedinorganicsystemcomparedtocon- ventional(organicvs.conventional).

Forthesameperiodandbetweenperiodsofconversionandper moduleofsize

Intheﬁrsttwoyearsofconversion,2014–2016,therateofproﬁt hasgrown,as aresult ofintroducingorganicwheat withinthe structureofproduction.Thisgrowthisdifferentdependingonmod- uleofsize:12.6%for5hamodule,12.7%for10hamoduleand12.8%

Table4

Wheat(conv.) 165 36.5 990 163,350 35.1 1039 171,435 32.7 49 8085 13.8

Wheatorganic 20 4.4 1000 20,000 4.3 1100 22,000 4.2 100 2000 3.4

Maize 184 40.7 929 170,936 36.7 1065 195,960 37.4 136 25,024 42.7

Sunﬂower 46 10.2 2079 95,634 20.6 2302 105,892 20.2 223 10,258 17.5

Soybean 37 8.2 415 15,355 3.3 771 28,527 5.4 356 13,172 22.5

Supplementarypayment – 611.43

Total(intheﬁrsttwoyearsofconversion) 445,275 502,425 57,150.4

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12.2 12.3 12.4 12.5 12.6 12.7 12.8 12.9

Scenario 1 (5 ha) Scenario 2 (10 ha) Scenario 3 (20 ha)

- % -

first two years of conversion after two years of conversion

Fig.5.Rateofproﬁtfordifferentsizeoforganicconversion.

Table5

Budgetofrevenuesandexpenditure,2011–2013(D,D/ha).

Speciﬁcation 2011 2012 2013

Wheat Maize Sunflower Soybean Wheat Maize Sunflower Soybean Wheat Maize Sunflower Soybean

Totalrevenues(D) 192,087.3 193,009.1 84,000.0 28,227.3 182,977.3 201,250.0 88,527.3 22,718.2 186,250.0 189,460.2 119,272.7 35,409.1 Revenuesper

hectare(D/ha)

1116.8 1128.7 2545.5 409.1 994.4 1037.4 1770.5 946.6 1006.8 1029.7 2592.9 957.0

Expenditure(D) 172,527.0 163,260.9 83,836.6 20,297.3 180,437.7 171,684.3 87,939.5 21,431.6 182,945.1 174,070.1 89,161.6 21,729.4 Expenditureper

hectare(D/ha)

1003.0 954.7 2540.5 294.2 980.6 885.0 1758.8 893.0 988.9 946.0 1938.3 58.4

Proﬁt(D) 19,560.2 29,748.2 163.4 7930.0 2539.5 29,565.7 587.7 1286.6 3305.0 15,390.2 30,111.2 13,679.7 Proﬁtperhectare

(D/ha)

113.7 174.0 4.9 114.9 13.8 152.4 11.8 53.6 17.9 83.6 654.6 36.8

Rateofproﬁt(%) 11.3 18.2 0.1 39 1.4 17.2 0.66 6 1.8 8.8 33.7 63

Source:Authors’owncomputationsbasedonfarmrecords.

for20hamodule.Ahighergrowthofrateofproﬁtfrommoduleof 5–10hacanbenoticed,comparedtothegrowthofrateofreturn from10hato20ha,determinedbythelevelofsupplementarypay- mentssustainedbystate,whichsupportconversionofsmalleragri- culturalareastoorganicfarming.Asaresult,thevalueofsupple- mentarypaymentsisnotproportionalwitharea(0.30–5ha,540D; 5.1–20ha,611.43D;andforareasabove21hatheaidis510D).

Afterthetwoyearsofconversion(after2016),forthesamemod- ulesofsizeforwhichscenarioshavebeenelaborated,therateof profitisalsoincreasing,from12.4%formoduleof5hato12.6%for themoduleof20ha,butlowerthanitslevelinthefirsttwoyears ofconversion,asaresultofthefactthatsupplementaryaidsare notpaidanymore.Thus,finaleconomicresultsarethedifference betweeneffects(revenues)andeffort(expenditure).Wehaveto mentionthatthepercentagesobtainedintheperiodafterconver- sion(12.4%,12.5%and12.6%)werecalculatedfortheyear2013 intermsofcosts,averagesellingpricesandproduction.However, theamountsofincomeandspending,andtheaverageproduction volumearevariablesthatcanleadtochangesinthesenseofthe increasingordecreasingtheefficiencyofthefarm.

Economicresultsobtainedinorganicsystemcomparedto conventional

Theevolutionsofthemainindicatorscomputedandanalyzed revilesthat thedecision toconvert conventional crop’sareato organicisappropriateanditrecordsacceptablelevelsofefﬁciency.

Animportantroleinadoptingthedecisiontoconvertisthestate ﬁnancialaidallotmentforsuchoperations,whichhighlightsthe needofmaintainingtheeconomicstimulusbothfromthegovern- mentandthroughtheCAPﬁnancialmeasures.

Duringtheperiod2011–2013,therateofprofitofthebusiness was11.8%,withlargeoscillationsofwheatprofitability.Moreover, duringthisperiod,profitofwheatcroprecordedthelowestlevel amongallcultures (1.4%in2012and1.8%in 2013comparedto

othercrops:17.2%and8.8%tocornand39.0%and63%tosoybean,in thesameyears).Asaresult,fordevelopingscenarios,theseshares havebeenconsideredinrespectofincreasingefficiency.Thus,the consecutiveconversionofthe5,10and20haofconventionalinto organiconeusingwheatcropdrivestoincreasingfarm’seconomic efficiency,expressedbytherateofprofit.Thelatterhasincreased, bothinthefirsttwoyearsofconversion,whenfinancialaidhas beenallocatedbythestate,andafterthisperiod.Inthefirsttwo years,thegrowthwillbehigherby0.8%for5haoforganicwheat, respectively0.9%and1%for10haand20ha.Aftertheconversion period,itwillalsorise.Thegrowthwillbeslowerthaninthefirst twoyears(becauseofthelackofadditionalfinancialsupportof thestate),butitwillget,inadditiontotheyear2013,0.6%,0.7%

and0.8%for5ha,10haand,respectively,20ha,thecorresponding surfacesforwhichthescenarioshavebeendeveloped.

Thelevelofthebusinessproﬁtduring2012–2013encourages thefarmerstoconsiderpromotingmoreactivelyorganicagricul- tureagainstconventionalagriculturalproductionsystems.Despite theoscillationsofproﬁtability,organicagriculturecouldbecon- sideredasanactualmethodforincreasingresultsinvaluingthe inlandagriculturalpotentialincontextofatransitionaleconomy asRomaniacontinuestobe(Table5).

Conclusions

The recent evolutions of the Romanian agriculture demon- strates,that,despitethemassivechangesinlandtenure,production andfarmstructures,lackofcapitalinvestments,reducedlevelsof efﬁciency,itiscapabletopromoteorganicagricultureasafunda- mentalfactorinincreasingthecapitalizationpotential.Asitwas reviledin recent studies (Ciutacu et al., 2014) betweentheEU agriculturalandruraldevelopmentmodelandRomanianagricul- turearestillmassivedissimilaritieswhichneedtobechallenged andovercome.Inthiscontext,ananalysisregardingthepossibility ofpromotingorganicagricultureinRomania, asalternativeand

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instrumentofabetteragriculturalparadigm,comestocomplete theresearchpanoplyinhighlightingtheopportunitiesforfuture development.

Fromthisperspective,theresearchhadasaprimaryobjective toinvestigatewhetheris moreproﬁtable fora farm toconvert conventionalcropstoorganicones,inactualconditionsofinland agriculturedevelopments. So, in a production approach, a ﬁnal answertotheresearchquestionisthatorganicwheatbringshigher returnsthanconventionalone,butwhenfarmersdecidehowmuch oftheirlandtoconverttoorganicfarming,theyshouldanswerthe questionwhethertheycanselltheproduction,andtoconsiderthe marketapproachanditsopportunitytosell.ForRomanianagricul- turetheprocessofconvertingimportantcropareasfromclassicalto organicagriculturemayrepresentafavourabledecisioninincreas- ingtheruralfarmers’revenueswhichareconstrainedtopractice subsistencefarming,duethelackofcapitalinvestmentsandland fragmentation.

Inthisregard,theresearchtargeted,inthebeginning,thecon- versionofapartofthetotalarablelandowned,developingthethree scenariostoevaluatetheresults.Thecasestudyhasbeendeveloped forwheatcrop,cultivatedunderorganicsysteminsurfacesof5,10 and20ha.Thefindingsshowthattheeconomicefficiencyisslightly higherinorganicsystemcomparedtoconventional.Theresultsare inaccordancetothefindingsofotherresearches(Patiletal.,2012), thatshowthatorganicfarminghaspotentialtoincreasenetreturns, reducetherisksofcropfailureandreduceenvironmentalimpacts.

Ina socialresponsibility approachand ecologicalknowledge perspective,organicfarmingmaybeagoodbusinessforproducers.

Thebeneﬁcialeffectsoforganicfarmingtoenvironmentmustbe, also,considered.Theﬁndingssurprise,also,thefactthatorganic farmingshouldbeviewedasatechnologicalalternativetoconven- tionalagricultureintermsofobtainingperformance,andtoensure foodsafetyforpopulation.Landuseconversiontoorganicbecame anopportunityforthosewhomanageagriculturalbusinesses.The highleveloflandfragmentationandtheincreasingnumberofsmall farmsin Romanianagriculturemakesmoresuitabletheorganic farminginsteadofconventionalone.Theruralfarmersmaychoose organicagricultureasaviableoption.Opportunityisgivenbythe demandoforganicproductsincreasingly desiredbyconsumers.

Futureresearchshouldinvestigateorganicproducts’marketand identifyitstrendstoseewhetherorganicagriculturalproductshave potentialofdevelopmentinalargercontextofnewCAPchanging paradigm.Insuchconditions,farmersshouldconsiderorganicland useasadecisiontobetaken.

Acknowledgements

Thispaperhasbeenfinanciallysupportedwithintheproject entitled “SOCERT. Knowledge society, dynamism through research”, contract number POSDRU/159/1.5/S/132406. This project is co-financed by European Social Fund through Sec- toralOperationalProgrammeforHumanResourcesDevelopment 2007–2013.Investinginpeople!”.TheauthorswishtothankVasile Soproni,managerofthefarmTerraSanislau,SatuMare,Romania, forprovidingtechnicalassistanceincollectingtheeconomicand fielddata.

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