The economic potential of organic production for stockless arable farms importing biogas digestate: A case study analysis for western Germany

Abstract

CONTEXT

Most stockless organic farms depend on the import of organic nitrogen. Biogas digestates offer an interesting solution to address this need for flexible nitrogen fertilizers. Their application could support the conversion of specialized arable farms, contributing to the politically targeted expansion of organic production. However, various regulations on the use of off-farm biogas digestates exist, which differ considerably in allowed N imports. Despite the growing interest in the application of biogas digestates in stockless organic farming in practice and research, its impacts on the economic potential of converting from conventional to organic farming have not been investigated.

OBJECTIVE

This study assesses the economic potential of organic production for specialized arable farms without taking up animal production based on cooperating with a conventional biogas plant. The study considers the impacts of different regulations on importing off-farm biogas digestates.

METHODS

The assessment employs the bio-economic farm model FarmDyn to evaluate multiple economic performance indicators for three stockless arable case study farms with varying cropping patterns under conventional and organic production. The German federal state of North Rhine-Westphalia serves as the case study area. A large-scale sensitivity analysis quantifies the impact of relevant parameters with a high uncertainty or possible large impact.

RESULTS AND CONCLUSIONS

Our results suggest that organic farming has a high economic potential for specialized arable farms when biogas digestate is applied. Taking existing subsidies into account, organic farming economically outperforms conventional production for all assessed farms and regulatory scenarios. However, stronger restrictions on the application of biogas digestates shift crop rotations toward higher shares of crops with low nutrient requirements and legumes. This reduces, especially in case of fodder legumes, revenues and increases labor requirements, and lowers profitability and labor productivity. Distance to the biogas plant and subsidies for organic production impact strongly on profitability, whereas input prices show small effects. Results underline that the economic performance of stockless organic farming depends highly on import possibilities of nutrients. Furthermore, they suggest that subsidies for organic farming should better reflect its economic potential across farm types to reduce deadweight effects and boost conversion where it is costly.

SIGNIFICANCE

The study is the first to assess the impact of different regulations governing the import of fermentation substrates on the economic potential of stockless organic farming for specialized arable farms. This is relevant as conversion of stockless arable farms is lagging behind but could considerably contribute to reach policy targets for organic production.