Organic Farming and Farm Performance: the Case of Slovakia

The goal of this paper is to evaluate the economic efficiency of organic farms comparing them to conventional farms at the farm-level in Slovakia.Climate change is one of the current biggest challenges.At the level of European Union (EU) it is addressed by European Green Deal which sets the organic farming as one of strategies to mitigate the global warming.The EU committed to a very concrete goal, to reach at least 25% of the EU's agricultural land practicing organic farming by 2030.Therefore, organic farming is heavily discussed across the EU.We evaluate the share of organic farming across and in individual EU Member States (MS).From the economic perspective, the organic farms record lower yields and are less productive, therefore also the additional financial support at national and EU level is provided.On the other hand, many studies present the environmental and health benefits of organic farming and organic products.Agriculture in Slovakia is dominated by large corporate farms with 81.5 percent share in Utilised Agricultural Area (UAA).Small farms dominate in farm population and in production focus more on fruits, vegetables and animal production (mainly sheep and goats).We use individual farm data to compare the performance of organic and conventional farms.We merge financial data of farms operating in Slovakia in 2022 with data on agricultural subsidies including organic farming support.The main method of economic efficiency evaluation is financial analysis.Specifically, we compare financial ratios for both groups of farms following the methodology of Naglova and Vlasicova (2016) and standard financial ratios.The paper is an introduction to detailed comparison of organic and conventional farms using economic modelling of the authors.Firstly, this paper contributes to literature by a detailed analysis of organic farming system in Slovakia.Secondly, paper provides detailed results on differences in overall performance of organic and conventional farms comparable within other EU MS. Results offer an insight into effects of organic farming support in countries with high share of large farms on total UAA.Same conditions are in many CEEC like Czech Republic and former East Germany.