Effects of trade liberalisation on organic farming and its relative economic competitiveness compared to conventional agriculture in Switzerland

Jürn Sanders

Project Outline

The outcomes of the current WTO agriculture negotiations (Doha-Round) and the Bilateral Agreement with the EU will significantly change the economic environment for Swiss farmers. Since most farms produce at higher costs per output compared with farms in neighbouring countries improvements in market access as well as substantial reductions in trade-distorting measures will lead to a drop in producer prices and increased competition.

However, agricultural liberalisation will not affect all producers in the same way. Experiences of Austria's accession to the EU as well as analyses of the AP 2002 show, that organic farms are often less severely affected by a reduction of guaranteed prices than conventional farms, if price cuts are compensated by direct payments. Further research is needed to clarify whether organic farming might also be less affected by the current WTO agricultural negotiations and the Bilateral Agreement.

Against this background, the overall aim of this project is to analyse and compare the likely effects of the coming agricultural trade liberalisation (WTO Doha-Round, Bilateral Agreement) on organic farming in Switzerland and its economic performance in comparison to conventional / integrated farming systems.

A comparative-static process-analytical programming model will be used to model and analyse the likely effects on farm production, factor allocation, supply of agricultural products and farm income of different representative farm groups (organic and conventional ones).