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Much of the early research carried out on organic farming systems was based on comparisons between organic and conventional approaches. This type of work was criticised for a number of reasons, including the methodological difficulties of comparing whole farm systems, the limited applicability and the costs of the results obtained, and the lack of progress in solving technical problems in organic farming (Lampkin and Padel, 1994).

Comparisons with conventional systems, particularly relating to the economic and

environmental impacts of organic farming, can be useful despite these concerns. Existing organic producers, clearly, will be more interested in developmental work and in comparisons between their own holdings and those of other organic producers. Conventional producers, however, need conventional versus organic comparative data in order to make soundly-based decisions on the implications of conversion, although the most important issue for the

conventional farmer is the likely impact on his or her own farm, rather than the generality of farms. All farmers, organic and conventional, are influenced by the decisions of policy makers and governments in the fields of agricultural, economic, and environmental policy. The success or otherwise of policy-making depends critically on the quality (often even more than the quantity) of data available to the policy maker, and this must include soundly based, comparative data on different farming systems.

The comparison of farming systems is an area of research that is problematic even in situations where the results are not likely to be controversial. Unlike an experimental situation, it is not possible to hold most factors constant while examining the effects of

changes in a few key variables. In the case of system comparisons, a large number of variables are involved. Some of these variables, such as enterprise mix and intensity of input use, will be (more or less) directly influenced by the farmer or the farming system employed. Others, such as location (infrastructure and market access), soil texture, topography and climate, are not directly influenced by farm management decisions. Resource endowment in terms of land area and tenure, owner equity, availability of family labour, management capacity (skill, education, experience), and quota ownership is also to large extent independent of management decisions.

The Farm Business Survey has, over the years, developed some techniques to deal with the problem of making such comparisons. Farms are classified by farm type and business size, and in some cases by region. The type and size classifications are based on a detailed European methodology described in Commission Decision 85/377/EEC.

In addition, income measures such as Management and Investment Income and Net Farm Income are based on standardised assumptions:

• All land is assumed tenanted - a notional rental value is applied to owner-occupied land and landlord-type property costs are excluded

• All capital is assumed to belong to the farmer - interest charges are excluded

• All labour is assumed to be paid - notional charges based on average employee wages are applied to unpaid family as well as farmer and spouse labour

These assumptions are relaxed in the case of Occupier's Net Income and Cash Income, which reflect the actual labour, tenure and capital borrowing situations on farms, but comparability between farms is correspondingly reduced.

a certain extent, dependent on the above factors, but also on the wishes and experience of the owner or manager. The factor of organic management may affect the enterprise mix, but does not necessarily. Some farms converting to organic management do not change their enterprise mix, others make radical changes. Additionally there is a spectrum within each type of farm: a predominantly dairy farm, whether organic or conventional, may operate at a high intensity, with high inputs, or may be extensive and grow a variety of forage crops and cereal crops for feeds.

Further, there are potential difficulties of definition of organic and conventional systems. In this study, all the results presented for organic farms will have a certified organic land area of greater than 50% by the third year of the study. Some organic farms with non-organic areas actually manage their land according to organic principles even if land is not registered as in conversion. Also, since the FBS does not differentiate between organic and conventional farms in their survey, so-called conventional farms may also be managed organically but not certified.

With reference to the economic performance of organic farms, different researchers have adopted a number of approaches. These include comparisons of pairs of similar organic and conventional farms, as well as comparisons with differentiated (e.g. by type, size and location) and undifferentiated groups (e.g. national averages for all farms). The possible combinations of these approaches are indicated schematically below:

Conventional Individual farms Differentiated

groups

Undifferentiated groups Individual farms

Differentiated groups

Organic _{Undifferentiated groups}

Examples of these different approaches are described in Lampkin and Padel (1994)8. Each approach has particular strengths and weaknesses, depending on what information is required as well as which factors are determined by the organic or conventional management of the system. Reliance on individual farm data and pairwise comparisons is subject to the influence of the management capacity of individual farmers, while undifferentiated groupings do not take sufficient account of differences in farm type.

Farm comparisons are always flawed due to the difficulties in finding the right group and the delay in publishing of the data. Further, analysis can indicate whether performance is above or below average and may indicate areas of weakness, but it fails to provide information on why performance is poor and how to improve it, or how to improve on good performance.

8 _{Lampkin, N. H. and S. Padel (ed.) (1994) The economics of organic farming: an international perspective. CAB} International, Wallingford.