The Diffusion of Organic Farming in Lithuania

The institutions governing organic farming in Lithuania constitute an unusual mix: relatively low information and support services are coupled with a high level of subsidy and low market prospects in the short to medium term. While the literature emphasizes a complex set of reasons for conversion consisting of personal (financial, health, environmental and other concerns), farm-related, and sometimes institutional factors, the hypothesis for Lithuania is that financial support is the dominant reason for increasing diffusion, not least because adoption numbers match the development of subsidy levels fairly well. To investigate this, and to understand why the majority of farmers still do not convert in face of relatively high financial support, a survey with organic and conventional farmers was conducted during spring and early summer 2005. The results suggest that the main motivations for future in-conversions are primarily connected with economic and farm management reasons. These depend primarily on the farm type; whether farmers believe that it is possible to manage an organic farm effectively; the subsidy, and related to this, the farmers' expectations of effects on land and land-rent prices. The survey points also to substantial farm-support deficits, with a low uptake of extension services in general and low availability of organic farming specific advisory services. By concluding, we recommend to rebalance direct subsidy levels with investments into support infrastructure and market development to increase the effectiveness of the whole organic farming 'system,' Finally, we critically discuss effects of land capitalisation of relatively high direct organic subsidies, which might have distorting effects if they are not linked to production levels.