Explaining organic farming through past policies: comparing support policies of the EU, Austria and Finland

Journal of Cleaner Production 16 (2008) 1e11 www.elsevier.com/locate/jclepro

Explaining organic farming through past policies: comparing support policies of the EU, Austria and Finland* Heli Annika Lesjak* Alpen-Adria-Universita¨t Klagenfurt, Universita¨tsstraße 65-67, 9020 Klagenfurt, Austria Received 21 November 2005; accepted 17 June 2006 Available online 26 September 2006

Abstract The present paper argues that the growth of organic farming correlates with the past support policy decisions. Not the recent direct organic farming payments are of importance, but rather the extent to which the past policies focused on rural development. Building on the OECD positive policy principles, the paper assesses the support policies of Austria, Finland and the EU. The policy appraisal was based on 16 distinct assessment criteria, with 1960e1994 as the timeframe. In addition to the largest organic farming sector, Austrian support policy demonstrated the highest rural development orientation. The CAP framework enabled but did not enforce rural development, whereas the rationalisation tendencies were strongest in Finland. Ó 2006 Published by Elsevier Ltd. Keywords: Agricultural support policy; Forms of support; Organic farming

1. Introduction Agricultural policy objectives are longstanding and uncontested and centre on guaranteeing farmers’ income and correcting market failures, therefore it is the choice of form of support which divides and differentiates national policies. It is an inherent fact that the guaranteed, high target price support system has benefited large, intensive agricultural holdings [1]. At the same time, small farmers, especially in less favoured areas, have seldom been in a position to generate their Abbreviations: CAP, the Common Agricultural Policy of the European Union; EU, the European Union; OECD, the Organisation for Economic Co-operation and Development; PEM, policy evaluation matrix, as formulated by the OECD; PSE, producer support estimate, as formulated by the OECD; NAC, nominal assistance co-efficient, as formulated by the OECD; MPS, market price support, as formulated by the OECD; COM, common organisation of markets, as formulated by the EU. * This paper is based on a PhD thesis ‘‘Explaining Organic Farming through Past Policies, comparing Support Policies of the EU, Austria and Finland’’ written for the University of Klagenfurt, Faculty of Business Administration, Department of Economics. * Tel.: þ43 463 2700 9200; fax: þ43463 2700 9299. E-mail addresses: [email protected]; [email protected] 0959-6526/$ - see front matter Ó 2006 Published by Elsevier Ltd. doi:10.1016/j.jclepro.2006.06.005

income through increased production volumes. In the name of rationalisation, small farmers have too often been confronted with the decision to either expand or give up farming altogether. Under a favourable, extensive and multifunctionally orientated agricultural support policy, however, a small farmer can guarantee his livelihood through the combined production of non-commodity output, such as landscape, and differentiated, high price commodity outputs. Organic farming likewise builds on the production of natural, high quality products based on environmentally and animal friendly farming practices. The operations of a mixed multifunctional farm with extensive farming practices are closer to the fundamental principles of organic farming than those of an intensive, highly specialised agricultural holding [2]. The present paper builds on the hypothesis that the preconditions for organic farming were laid down well before the beginning of the direct organic support payments. In the past, agri-environmental policies or rural development were not explicit policy objectives. Extensification, farm diversification and support for farms in less favoured areas were primarily aimed at regulating production. Nevertheless, it is posited that the support given to the production of non-commodity

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outputs, or measures focussing on environmental or social concerns, created the groundwork for today’s organic farming. The present paper consequently argues that the contemporary standing of organic farming is dependent on the weight given to policy issues related to multifunctionality and rural development in the past. The CAP centres on common financial support measures. Due to its supranational character, the EU constitutes a single regime for the purpose of the support policy analyses. The CAP mechanism will therefore be benchmarked against support regimes outside its borders, namely with those of Austria and Finland. As both Austria and Finland have had to combat overproduction in the past, the operation of their agricultural policies shows substantial parallels with that of the EU. On the other hand, due to their late accession, Austria and Finland have been free to shape and form preconditions for organic farming policy through their own national support policy decisions. More profound policy analyses appear especially interesting since the size of the sector and the volume of financial support for organic farming lie well above the EU-15 average in both countries (see Table 1). Despite the common support framework, the development of organic farming has been subject to great divergence across the EU-15. Both Lampkin and Michelsen et al. point to the interplay between agricultural policy, farming community and food market as the most significant growth component [3]. Michelsen et al. speak of an adoption process, in which organic farming is integrated into the institutional setting. In addition to public expenditure, factors such as legal and political recognition, relationship to the farming community, the food market and high-level political back-up are also of importance [4]. When comparing the three regimes in the mid-1990s, Austria’s institutional setting for organic farming seems the most conducive. Austria submitted its accession application in parallel to the publication of Minister Riegler’s eco-sociological agriculture concept. While the accession negotiations provided the reason, Riegler’s concept spelled out the remedy. Owing to the general policy reorientation, the setting for the first organic farming payments was highly favourable: the design of the payments showed great parallels to the direct income mounting farming subsidies with strong social components [5]. The uncertainty surrounding the EU accession created an atmosphere of change, which in return resulted in the most dynamic growth period in organic farming. The launch of the first organic food line by the major supermarket chain Billa-Merkur created further new impetus in 1994 [6]. Table 1 The Three Regime Appraisal based on Size of Organic Farming Sector, 1997 Regime

Share of organic arable area (%)

Share of organic farmers (%)

The EU-15 Austria Finland

1.8 10.1 4.7

1.3 9.5 4.8

Source: Agriculture in the European Union e Statistical and economic information, European Commission, 2000.

As regards the EU, the CAP’s support framework provided a broad but vague organic farming policy instrument mix. The organic farming payments were only partly co-financed and of a voluntary nature. Moreover, certification structures, relations within the farming community and the development of the food market lacked common, affirmative actions. In short, the EU enabled but did not enforce organic farming. In the case of organic farming support possibilities, the EU offered more than Finland has implemented. Finland, in return, has performed better in terms of public expenditure, food market and farming community interrelationships. Yet the setting for organic farming in the mid-1990s was of a highly contradictory nature. Despite some integration into the mainstream farming community, organic farming lacked high level political backing in Finland. The organic farming support measures merely pushed crop production [7]. Although there was a clear will to export organic crops, no efforts were made to develop the organic livestock sector to allow organic forage to be fed to organic livestock [8]. This underlines the missing link between greening, rural development and Finnish organic farming support. The high support volumes in the mid-1990s appear to be the main cause for the organic farming sectors above-average size compared to the EU-15. To conclude, the size of the Austrian and Finnish organic farming sectors and their public expenditure on organic farming are above the EU-15 average [9]. However, an assessment based on the entire organic farming institutional setting results in differing conclusions. Whilst Austria’s number one position is uncontested, the Finnish performance then equals the EU-15 average. Having highlighted the differences in the standing of organic farming, analyses of past support policies will be applied to explain the differences across the three regimes. The OECD positive policy reform principles, which aim at a market responsive, efficient, sustainable, viable and innovative agrofood sector, provide a common framework for the support policy assessment. In order to measure the annual progress towards positive agricultural policy reform, the OECD applies a policy evaluation matrix (PEM) consisting of three variables [10]. According to the OECD, ‘‘progress towards the long term objective of policy reform’’ requires ‘‘a combined reduction in the overall level of support and a re-instrumentation of policy measures’’ [11]. The PEM subsequently consists of three variables which measure different reform elements. In addition to the %PSE as an indicator of the general level of support, the matrix evaluates the composition of the producer support estimate (PSE) measures and the variation in the level of support across commodity groups [12]. Table 2 presents OECD policy evaluation matrix data on the EU, Finland and Austria. The time series begins in 1986 and ends in 1994 [13]. Focusing in 1986, the PSE composition variables demonstrate an almost exclusive application of input/ output-linked policy instruments across the three regimes. The differences in the PSE composition across the three regimes are of a highly marginal nature in 1986. At the same time, the average price gap between the domestic and world market commodity price levels, as measured by the producer NAC, differs most across the three regimes. Here Finland has

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Table 2 Policy Evaluation Matrix (PEM) and the EU, Austria and Finland Year %PSE EU AT FIN

1986

1987

1988

1989

1990

1991

1992

1993

1994

48 39 60

48 41 63

41 40 63

36 33 62

44 44 64

49 47 63

46 49 57

45 50 57

42 52 62

PSE composition EU 0.96 AT 0.99 FIN 0.97

0.97 0.99 0.96

0.96 0.99 0.97

0.93 0.98 0.96

0.94 0.98 0.96

0.94 0.98 0.95

0.91 0.95 0.93

0.79 0.93 0.88

0.75 0.91 0.89

NAC coefficient EU 1.9 AT 1.6 FIN 2.5

1.9 1.7 2.7

1.7 1.7 2.7

1.6 1.5 2.6

1.8 1.8 2.8

2.0 1.9 2.7

1.9 2.0 2.3

1.8 2.0 2.3

1.7 2.1 2.6

Source: Producer and Consumer Support Estimates, OECD Database 1986e1999.

insulated its market from the world price development to a much greater extent than its two counterparts. All in all, Austria shows the best performance in two out of the three variables in the year 1986. The share of gross farm receipts derived from the policies is substantially lower in Austria than in the EU-12 and Finland, the difference in Finland being almost twofold. The data on producer NAC for 1986 produce the same outcome. Whereas the EU shows the second best performance in all the three variables, Finland performs worst in two out of the three variables. The present paper builds on the following assumption: the better the regimes performance as measured by the three PEM variables, the more favourable the premises for organic farming. In chapter two the paper breaks down the three PEM variables and formulates its own assessment criteria. After firstly giving a brief explanation for the choice of criteria, the paper benchmarks the past support policies of Austria, Finland and the EU with the help of 16 assessment criteria variables, applying separate assessment criteria for market and structural policy. The aim of the past support policy analyses is to quantify the rural development orientation of the three regimes. In the concluding chapter three, the findings on the standing of organic farming are paired with the past support policy analyses of the three regimes and supplemented by concluding remarks. 2. Three regime support policy appraisal For the purpose of the long-term support policy evaluation, the present paper will attempt to disintegrate the three PEM variables. These, in turn, measure the progress towards a more market responsive, efficient, sustainable and viable farming system. The present paper tries to characterise the nature and scope of market support in order to measure the economic viability of the applied support policy. It assesses the regimes investment guidelines and other structural policy instruments in order to quantify the weighting of social components. Through its analyses of market and structural policy instruments the paper will, moreover, evaluate the extent to which environmental integration has evolved. The choice of

the assessment variables builds on the OECD positive reform principles and has the aim of measuring the weighting given to multifunctional, rural development oriented support policy in the EU, Finland and Austria. The observation period 1960e 1994 constitutes the timeframe for the support policy assessment. Whilst the remarks in the first paragraph explain the choice of assessment criteria, the second paragraph sums up the key findings. At the end of the chapter a table consisting of the appraisal results will be presented, together with concluding remarks. 2.1. The expenditure breakdown between market and structural policies All the three regimes differentiated their agricultural spending between market and structural policies. Not only the objectives, but also the forms and terms of support tend to differ greatly. To start with, the three regimes were compared in terms of expenditure breakdown between market and structural policies. The present paper worked on the premise that the higher the relative weighting of structural policy, the greater the potential rural development orientation. Table 3 sums up the expenditure breakdown of the three regimes for the years 1970, 1980 and 1990. In the case of Austria, the category ‘‘others’’ covers the total support for agriculture and forestry, including support in the interests of the national economy. In the case of Finland, ‘‘others’’ comprises expenditure on advisory services, structural development Table 3 Three regime agricultural expenditure breakdown EU

1970 1980 1990

Austria

Finland

Guarantee (%)

Guidance (%)

Price settlem. (%)

Others (%)

Price income (%)

Others (%)

93 96 93

7 4 7

60 55 61

40 45 39

93 85 87

7 15 13

Source: own calculations.

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and other miscellaneous activities. Although all the three regimes experienced slight annual fluctuations, the expenditure breakdown remained relatively static during the observation period. Table 3 replicates the prevailing patterns well; consequently, the conclusions are straightforward. Market price support accounted for the predominant form of expenditure in all the three regimes. However, the support in the form of price settlement was restricted to roughly 60% in Austria, thus 40% of Austria’s total agricultural expenditure comprised other forms of support. In the case of Finland, other forms of support amounted to a good 10% during the observation period. As regards the EU, the long-term Guidance expenditure came to roughly 6%.

2.2. Market policy assessment criteria 2.2.1. Characterisation of the market price support mechanism The nominal assistance co-efficient (NAC), which measures the gap between the value of total gross farm receipts, including support, and the value of production in world market prices, indicates the market responsiveness of the support regime. The higher the ratio the greater the isolation. Out of the three PEM variables, the differences in the NAC ratio were highest in 1986. The present paper examined whether the pricing policy of the three regimes can at least partially explain the differing NAC ratios. In terms of production steering, the price increases should have been the highest for products with a low degree of self-sufficiency and the lowest, if not negative, for over-produced products. In short, the nature of the market price support (MPS) mechanism, whether it generated automatic price increases or had some in-built constraints, constituted the second assessment criterion. The differences in the market price support mechanisms of the three regimes go a long way towards explaining the discrepancies between the NAC ratios in 1986. Due to the guaranteed production cost compensation, the nominal price increases were automatic in Finland. The price increases not only hedged the farm income from production cost increases, but also served as the predominant farm income transfer instrument [14]. In the case of the EU, the price increases were a product of the supranational negotiation process; the national agricultural ministers fought for a price increase in order to bring home good news. At the same time, the EU was the first regime to freeze and cut its prices [15]. As regards Austria, the restrictive provisions of the price regulation act

and the broad presentation of the pricing committee dampened automatic, annual price increases [16]. 2.2.2. Export subsidies versus other expenditure Whereas the three regimes refrained from calculating the direct cost of MPS, expenditure on border measures, onfarm and public stockholding, food aid and consumption subventions reflects the magnitude of marker price support. Here the three regimes were compared in terms of expenditure corresponding to export subsidies, the predetermined aim being to quantify the extent of direct excess production disposal. Whilst the share of export subsidy expenditure in the EU and Finland contracted between 1978 and 1988, there was a substantial upsurge in Austria (see Table 4). In other words, Finland and the EU already had severe overproduction problems in the late 1970s. In Austria, export financing did not explode until the 1980s. The broader market policy instrument mix also partly explains the declining importance of export subsidy expenditure in Finland and the EU. 2.2.3. Excess supply and farmers’ contribution Building on the breakdown between export subsidy and other market support expenditure, the focus now shifts to the farmers’ co-financing responsibility. From 1960 to 1990 there were no international trade agreements to limit the expenditure on export subsidies. It is therefore of interest to examine how aware the farming community was of the real cost of the export subsidies incurred. The three regimes were subsequently compared in terms of the extent to which the farmers participated in financing the exports of excess production. The assessment criterion in this case was the nature and effectiveness of the applied measures, whether a lump sum at the end of the year or a reduced target price or production contingent. Also significant was whether or not the levies entailed differentiated treatment of small and extensive farms. With the exception of the pork production levy, the Finnish provisions governing marketing payments and levies entailed no farm size, location or productivity differentiation. Whilst Austria differentiated between milk produced in mountain areas and elsewhere, the EU co-responsibility levies on both milk and arable crops entailed modified provisions for small farms or farms in less favoured areas. Yet the farmers’ cofinancing responsibility primarily contributed towards financing excess supply. Not only was the share of marketing payments low in relation to target prices, but the fertiliser levies increased the production cost of all crops, irrespective of whether they were in surplus or not. Thus, the incentives to

Table 4 Export subsidies versus other market policy expenditure 1978

1988

EU (%) Export Subsidies Others Total

3637 5040 8677

In millions ECU, ATS, and FIM. Source: own calculations.

Austria (%) 42 58

1878 2372 4250

Finland (%) 44 56

1043 1532 2575

EU (%) 41 59

9941 17,614 27,555

Austria (%) 36 64

7377 1382 8759

Finland (%) 84 16

1804 4677 6481

28 72

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cut down individual production were modest. In the case of Finland, the farmers’ contribution was levied within a predetermined budgetary framework, whereas there were no predetermined ceilings on the total amount of levies collected in Austria or in the EU. As the increased share of farmers’ contributions shows (see Table 5) Austria, and to a lesser extent the EU, increased farmers’ responsibility from 1978 to 1988 in line with the increasing export costs. 2.2.4. Management of excess supply In the case of all three regimes, the export subsidy expenditure reached the highest levels with respect to arable crops and the milk market. Moreover, all the three regimes introduced a milk quota regime and various other instruments to restrain overproduction. In analysing the support policy instrument mix for curbing excess supply, the three regimes were compared in terms of the extent to which they applied income diversification and extensification as a countermeasure to overproduction. The application of such policy instruments not only curbed excess supply, but also had a positive impact on small-scale farming in less favoured areas. A comparison of the three regimes shows that Austria had the most advanced production management framework. It efficiently steered production from bread crops to forage in the 1970s, and there was a similar shift from arable to alternative crops in the late 1980s. By 1987 both the milk and arable crop markets were subject to strict guaranteed quantity and production area rules, while the expansion of animal husbandry was subject to an allowance and to stocking density rules. More importantly, the Austrian support mix of fixed producer prices, area payments and cross-compliance rules with bread crop contracts effectively enforced the advancement of alternative production. In the EU, the applied policy instruments lacked this effectiveness. In Finland, the focus was on a physical reduction in production, either in hectares or heads. Alternative production or extensification was not treated as serious option within the Finnish excess supply management framework. 2.2.5. Policy instruments favouring small farms in less favoured areas Until the early 1990s the policy makers keenly positioned MPS as a key farm income transfer instrument, the argument being that high guaranteed prices help to maintain small farms in remote areas. However, the OECD concludes that MPS not only shows low efficiency in distributing farm income, but production linked aid tends to increase disparities in relation Table 5 Export subsidy and farmers participation 1978 EU

1988 Austria

Finland

EU

Austria

Finland

Export 3637 1878 1043 9941 7377 1804 subsidies Farmer’s 155 4% 269 14% 180 17% 1310 13% 2072 28% 170 9% share In millions ECU, ATS, and FIM. Source: own calculations.

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‘‘to structural factors such as size, specialisation and region’’ [17]. It is evident that a support policy based on MPS discriminates against small farms in less favoured areas. The small farm size together with the permanent natural handicaps place tangible, binding constraints on productivity increases. The three regimes were ranked based on the market policy instruments targeting farms in less favoured areas. In addition to the mechanism of MPS as such, the application of policy instruments which shouldered income diversification and upheld farming in less favoured, remote areas constituted the sixth assessment criterion. It is evident that regionally differentiated price support aimed to address the needs of small Finnish farms in remote locations [18]. However, the incremental income transfer impact of the regionally differentiated price support mechanism was largely cancelled out by the operations of the high guaranteed MPS mechanism in general. Regional differentiation aside, the Finnish policy instruments applied prompted intensification and productivity increases. As a consequence, the Finnish support policy framework failed to offer smaller farms income diversification alternatives. In the EU and Austria small farmers had the chance to diversify their income in the form of direct sales of milk, or through extensive suckler cow or sheep production. Also, the scope and volume of production aid expenditure on alternative crops were higher in the EU and Austria than in Finland. 2.2.6. Greening policy instruments By the early 1990s all the three regimes had introduced setaside payments. Although set-aside had the purpose of stabilising production, it also evidently entailed environmental protection components. The three regimes were analysed as to the extent to which they integrated environmentally friendly policy instruments into their market policy support framework. The point in time, scope and nature of agri-environmental policy instruments are of significance here. The introduction of instruments with potentially positive environmental impact occurred relatively late. At the same time, the nature and impact of the applied instruments differed. Financial aspects aside, a general fertiliser tax, marketing payment or set-aside rule may have stabilised farming practices, but - in contrast to extensification or agri-environmental measures e it did not enforce a change. The scope and choice of available measures were the highest in the EU and Austria. With the exception of set-aside and stocking density rules from the 1992 reform, the uptake of all other EU undertakings was, however, voluntary. Moreover, the fact that the EU co-financed only 50 per cent of the measures shifted both the political and financial responsibility to the member states. In Austria too, the uptake of green cover set-aside, crop rotation and extensification was based on voluntary participation, yet the cross-compliance rules between bread crop contract actions and the production of alternative crops forced the majority of farmers to change their practices. In 1991/1992, a farmer wishing to grow bread crops had to either grow alternative crops or opt for a green cover set-aside of the cultivated area in a ratio of 2 to 1 [19].

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2.2.7. Weighting of quality policy instruments In a similar way to the greening policy instruments, the three regimes were compared in terms of the extent to which their qualitative criteria steered or curbed agricultural production. Here the focus was on policy instruments which guided production capacities away from dairy and arable crops towards high quality alternative production. In short, the present paper examined whether any of the three regimes linked excess supply management to the uptake of extensive, high quality production. It is evident that quality considerations were of secondary importance from 1960 to 1990. Moreover, the respective policy instruments not only pursued quality objectives, but also above all were socially orientated. The EU and Austrian examples of additional hard cheese and durum wheat support underline the point. The production of both durum wheat and hard cheese without silo feeding necessitates extensive farming methods. Moreover, it is the less favoured areas which have traditionally opted for this type of farming. While the EU support payments for extensive suckler cow production encouraged quality beef produce, the Austrian aid entailed greater social components. In the case of Finnish agricultural support policy, no link between quality, social concerns and management of overproduction could be identified.

2.3. Structural policy assessment criteria 2.3.1. Expenditure based on rationalisation versus structural improvement To start with, different structural support policy instruments were re-categorised either as rationalisation or as structural improvement measures. Rationalisation measures aim at farm enlargement, productivity increases and improvement of age structure. Structural improvement measures promote rural structures in the form of land, forestry and water improvement works, pay special attention to farms in less favoured areas and centre on farm diversification. Farm diversification, in turn, comprises aid for the production of alternative crops or breeds, farm tourism, forestry, quality improvement and direct sales in general. The present paper worked on the premise that the higher the weighting of structural improvement policy instruments, the greater the rural development orientation. Despite having the lowest structural policy share in relation to total agricultural expenditure, the EU’s share of structural improvement instruments was the highest from 1980s onward. The changes in the EU’s structural policy orientation during 1970s, including the applied forms of support, therefore deserve recognition. Following the incorporation of the petrol discount, the Austrian structural policy expenditure broke down evenly between structural improvement and rationalisation. Following the cessation of the settlement policy, the share of Finnish structural improvement measures contracted continuously between 1970 and 1990. Between 1980 and 1990 the share of structural improvement measures was substantially lower in Finland than in the EU or Austria.

2.3.2. Expenditure breakdown in accordance with OECD forms of support Returning to the OECD forms of support classification, market price support payments based on output or input use account for the forms of support with ‘‘the greatest effects in stimulating production and input use, which distort trade and often contribute to raise environmental pressure.’’ [20] Not only are investment aids the most common form of payments based on input use, but also one of the most important structural support policy instruments. Investment subsidies, on the other hand, where the payment of the subsidy is conditional on the application of fixed inputs, constitute payment based on constraints on fixed input. The three regimes were consequently compared to their relative share of payment based on input use versus other forms of structural support policy. Table 6 reproduces the structural policy expenditure breakdown in accordance with the OECD forms of support classification. In 1970 the share of payments based on input was highest in the EU, followed by Finland and Austria. In 1980 and 1990, following the shift in the CAP Guidance policy instruments, the share of payments based on input use was highest in Finland. Due to the priority given to the special mountain farming programme, the application of payments based on Payments based input was less marked in Austrian structural policy. All in all, the breakdown for 1990 shows a substantial increase in the share of other forms of support across the three regimes. 2.3.3. The breakdown of investment aid expenditure All three regimes provided investment aid for building and construction from 1960 to 1990. The present paper compared the scope of the additional applicable investments and their respective weighting, differentiating between rationalisation and structural improvement investments. All in all, the weighting of investment aid instruments for rationalisation within Finnish structural policy closely matches with that of the EU. However, while the share of rationalisation instruments in the EU contracted slightly during the observation period, there was a slow but continuous increase in Finland. Moreover, the share of investment aid relative to total structural policy expenditure during the observation period was highest in Finland. The type of investment aid applied, especially land acquisition, has no match in either Austria or the Table 6 Structural policy forms of support breakdown

1970 1980 1990

Payments based on input use Other forms of support Payments based on input use Other forms of support Payments based on input use Other forms of support

Source: own calculations. a Figure for 1990 is a rough estimate.

EUa (%)

Austria (%)

Finland (%)

90 10 22 78 20 80

38 59 52 48 43 57

77 20 88 11 48 51

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EU. In the case of Austria, roughly 60% of the total investment aid expenditure went on rationalisation instruments, yet the relatively modest share of investment aid in relation to total Austrian structural policy expenditure reduced the impact of rationalisation tendencies. 2.3.4. Prioritisation of specific applicable investment aid With reference to the rate of assistance, the payback period and interest rates, the present paper summed up the types of investments prioritised by the three regimes. In short, the paper differentiated the regimes in accordance with the degree to which they undertook rationalisation or structural improvement investments. Vagueness and lack of priorities aside, the EU regulations prohibited investment aid for land acquisition from the beginning. Moreover, environmental protection and improvement counted as eligible investment from 1985 onwards, and investment aid which affected production increases in sectors with excess supply was to be refused or limited [21]. In Austria there was a clear focus on structural improvement investments. Investments in mountain areas enjoyed the highest interest subsidies and the longest payback periods. Whereas the standard aid rates were valid for the key rationalisation measures, namely construction and estate stock-up, investments in structural improvement such as road construction and water works benefited from augmented rates of assistance [22]. As regards Finland, the guidelines between 1977 and 1990 prioritised investment aid for land acquisition and sibling shares. Land acquisition, which enforced farm enlargement, benefited from the highest possible rate of assistance, the lowest annual interest rate and the longest payback periods [23]. 2.3.5. Treatment of less affluent, small farms and farms in less favoured areas With reference to the rate of assistance, the payback period and interest rates, the present paper examined whether there was any differentiation based on social and regional criteria. The types of applicable investment in the less favoured areas were also compared. The 13th assessment criterion focused on whether the support for less favoured areas centred on farm diversification or rather on rationalisation. All the three regimes differentiated their investment aid provisions in accordance with social and regional criteria, yet Finland positively discriminated its farmers in the name of rationalisation. All the Finnish special development zone measures targeted rationalisation and intensification. Rather than enhancing and developing a region’s special character, the policy centred on output increases. In addition to the modified provisions, the Austrian and EU support regimes entailed tailor-made measures for less favoured areas. These measures aimed at upholding rural settlement and safeguarding the landscape. In complete contrast to Finland, the aid enhanced farm diversification and compensated the farmer for the production of non-commodity outputs. Between 1970 and 1989 the Austrian special programme for mountain farming accounted for 41% of the total structural policy expenditure [24].

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2.3.6. Treatment of part-time farmers The incorporation of part-time farmers into the support framework implies a multifunctional, rural development orientated policy approach. Such a policy aims at upholding agricultural holdings, instead of forcing them to expand or close down altogether. Moreover, as the OECD argues, ‘‘the development of income diversification, in particular from nonagricultural activities, tends to reduce income disparities among farmers and relative to other sectors of the economy’’ [17]. As the majority of part-time farmers tend to live in less favoured areas, the integration of part-time farmers into the support framework can consequently combat rural exodus, as Wiesinger concludes [25]. The present paper tried to rank the three regimes in accordance with their degree of discrimination towards part-time farmers. A comparison of the three regimes shows that part-time farmers were integrated best into the Austrian support policy framework. In Austria, investment aid was available to both full- and part-time farmers from 1970 onwards. Whilst nonfarm income posed no impediment to eligibility from 1970 onwards, the differentiation between farm and non-farm income was abolished altogether during the first half of the 1980s [26]. In the case of the EU, farmers with non-farm income of up to 50% of their total income were eligible for aid from 1985 onwards [21]. The Finnish support framework made a distinction between farmers and hobby farmers. The eligibility of the socalled Finnish hobby farmers was restricted to investment aid for housing [27]. 2.3.7. Cross-compliance with farmer’s dwelling function Farmers, whether full time or part time, or other persons with a dwelling site fulfil an important settlement function. Thus, strict conditions on all year around presence and cultivation as a precondition for investment aid or other forms of support would be an indication of an overall rural development policy orientation. The EU regulations between 1964 and 1994 did not crosscomply dwelling with eligibility. In the case of Finland, a general dwelling cross-compliance rule prevailed and the weighting of investment aid for housing was also relatively high [27]. This is in line with the general orientation of Finnish post-war settlement policy. Austria introduced the general dwelling cross-compliance rules into its guidelines later than Finland. At the same time, Austrian mountain farmers had to cultivate their farms all year round in order to qualify for aid from 1972 onwards [28]. The explicit reference to mountain meadows underlines the mountain farmers’ function as landscape guardians. Following 1980 directive, an Austrian mountain farmer fulfilled both settlement and landscape guardian functions [29]. In line with the objective of upholding rural settlement, Austrian farmers in the remote, endangered regions had to comply with stricter cultivation and dwelling provisions than elsewhere. 2.3.8. Environmental integration Finally, the three regimes were compared in terms of the extent to which environmental concerns were integrated into

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the structural policy legislation. Thus, the present paper did not benchmark the environmental policy of the three regimes per se, but rather reviewed and compared the integration of environmental concerns into the agricultural structural policy objectives and highlighted the environmental components of the instruments applied between 1960 and 1994. Introduced in the early 1970s, both the Austrian and the EU regimes less favoured area compensatory allowances entailed strong environmental elements. Both regimes justified the direct income payments by the need to compensate the farmers for their services in safeguarding the landscape. The integration of environmental aspects into the mainstream structural policy support framework was the most advanced in the EU. The EU promoted environmental protection projects as applicable investments and introduced the first direct, albeit national, support payment for environmentally sensitive areas in 1985 [21]. Austria and Finland followed this course in 1989 and 1991, respectively. While Austria incorporated environmental protection into its structural policy objectives in 1989, the integration of environmental objectives in the EU and Finland occurred in 1991. 2.3.9. The appraisal results Returning to the OECD policy evaluation matrix, the data from 1986 on the EU, Austria and Finland generated a clear-cut ranking result. When pairing the same PEM ranking with the size of organic farming sector, Austria ranks number one in terms of both assessment variables. Whereas the EU achieved the number two ranking in accordance with the OECD PEM matrix, its organic farming sector size is the smallest of the three regimes. Similarly, although Finland ranked second best in terms of organic farming sector size, its support policy performance based on the PEM variables ranked third and last. The PEM ranking provided a snapshot of the prevailing policies and subsequently constituted a starting point for the support policy analyses. The long-term three regime support policy analyses had the aim of disintegrating the diverse components of the PEM variables. For this purpose the 16 assessment criteria variables were formulated. While reflecting the OSCE positive policy principles, the wide selection of assessment criteria, including the breakdown between market and structural policy variables, aimed to guarantee objectivity. A ranking based on the performance of the three regimes was made for each variable. For some assessment criteria, numerical quantification of the performance proved difficult; in such cases only the best or the poorest performer was classified. Table 7 sums up the appraisal results in accordance with the 16 assessment criteria applied. Despite the longer timeframe and the wider selection of criteria, the support policy appraisal reproduced the results of the initial PEM ranking. Again, Austria’s support policy was seen to perform best, followed by the EU and Finland, respectively. As the two rankings showed, Austrian support policy demonstrated the greatest rural development orientation of the three regimes. Moreover, it was not the CAP framework, but much more the fear of it that drove organic farming growth in the early 1990s. It could in fact be argued that the Austrian

Table 7 Ranking of support policy based on the chosen assessment criteria

General 1. Market versus structural policy expenditure, 1980 Market policy 2. Characterisation of the MPS mechanism 3. Export subsidy and other market policy expenditure 4. Excess supply and farmer’s participation 5. Management of excess supply 6. Policy instruments favouring small farms in less favoured areas 7. Greening policy instruments 8. Promoting quality Structural policy 9. Expenditure; rationalisation versus structural improvement, 1980 10. Expenditure; payment based on input versus others, 1980 11. Investment aid expenditure: rationalisation versus structural improvement, 1980 12. Prioritisation of investment aid 13. Treatment of less affluent, small farms in less favoured areas 14. Treatment of part-time farmers 15. Cross-compliance with farmer’s dwelling function 16. Environmental integration

EU

AT

FIN

3

1

2

2 2 1 2 2

1 3 1 1 1

3 1 3 3 3

2 1

1 2

3 3

2

1

3

1

2

3

3

1

2

2 2

1 1

3 3

2 3 1

1 2 2

3 1 3

support policy framework provided a better setting for organic farming in the early 1990s than after 1995. The application of cross-compliance rules between arable crops and alternative crop production ceased as a result of EU accession, and the strong transformation towards alternative arable production came to a halt. Moreover, direct income payments in the form of the mountain farming and organic farming subsidies ceased after 1995. At the same time, Austria has actively shaped and formed the CAP support framework to suit its needs, underlining its political commitment to rural development orientated agriculture, including organic farming. At first sight, the appraisal results for Finland and the EU appear to stand in discrepancy with the argument put forward. The rationalisation and intensification tendencies were strongest in the Finnish support policy, and this applies to both its market and structural policies. In the 1950s and 1960s, Finnish settlement policy supported the formation of new farms in the less favoured areas of Eastern and Northern Finland. However, rationalisation policy in the form of the soil bank and investment aid hits these regions hardest in the early 1970s. According to Sauli, the arable area contracted by more than 10% in certain municipalities in Oulu and Lapland [30]. With the aim of helping the development areas to catch up with the more affluent south, Finnish development support focused on productivity increases. The fact that early retirement was the most important structural policy measure in the late 1980s underlines the rationalisation focus [31]. To conclude, the long-term Finnish support policy orientation does not pair well with the extensive and multifunctional principles of organic farming. It seems legitimate to characterise the above EU average sector size as a policy-push by-product of EU

H.A. Lesjak / Journal of Cleaner Production 16 (2008) 1e11

accession. The discrepancy between the size of the sector and the relatively unfavourable Finnish organic farming policy framework strongly supports the argument put forward. In terms of the overall CAP support framework, the dominance of the common organisation of markets (COM) mechanism is uncontested. It is evident that the CAP has resulted in extreme intensification and specialisation. In parallel to the COM, however, the EU Guarantee Section supported durum, alternative crops, hard cheese and suckler cow production. The Guidance Section budgets, in contrast to Guarantee, were never open end, but subject to annual appropriations, and the low co-financing rates of assistance shifted implementation to the national level. The vast scope of national discretion apart, the common structural support policy framework, should not be underestimated. The enacting of Directive 75/ 268 on hill farming in 1975 laid the groundwork for the promotion of extensive and multifunctional agriculture [32], and its vague definition, including the Council’s willingness to expand the scope of less favoured areas, substantially augmented the instrument’s significance. It can be concluded that the CAP’s common features are less marked than the official impression would suggest. In short, both the common market and structural policies have enabled the setting of distinct policy accents at national level, and the member states have been free to orientate their agricultural policy towards the world market approach or towards rural development. The relatively high degree of national discretion and the differing national policy orientations resulting there from help to explain the variation in organic farming sector size among the EU-15. Thus in actual fact, deviations from the EU average reaffirm the argument put forward. 3. Conclusions The working approach taken by the present paper was that the argument put forward held if the results of the support policy appraisal correlated with the size of the organic farming sector. In the case of Austria, there was a clear-cut, positive correlation between the size of the contemporary organic farming sector and the past support policy orientation. While the EU attained second position in terms of support policy appraisal, its organic farming sector size had the lowest ranking. As for Finland, its organic farming sector size was the second largest, yet the long-term Finnish support policy demonstrated the lowest rural development orientation of the three regimes. Due to its complex sociological features, the growth of organic farming cannot be reduced to a simple input/output equation. In addition to public expenditure, it was therefore necessary to take into account other factors, such as legal and political recognitions, relationships within farming community, the food market and institutional structures. As a consequence, the favourableness of the institutional setting for organic farming also needed to be considered. Again, Austria was the best performer. The Finnish institutional setting, on the other hand, despite the above EU average size of its organic farming sector, equalled the EU-15 average. In other words, Austria and Finland have each implemented the

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common organic farming support framework in a very different manner. There are also marked differences in the political recognition and functioning of the organic food market. Whilst Austria has benefited from high-level political back-up since 1989, there is a lack of similar political commitment in Finland. When comparing the favourableness of the institutional setting for organic farming with past policies, the relatively strong Austrian rural development orientation explains the large size of its organic farming sector. In the case of Finland, however, the long-term policy focus on efficiency and rationalisation has led to a sub-optimal institutional setting for organic farming. These findings result in the conclusion that 1. There is an unambiguous correlation between past policy orientation and the development of organic farming. Yet, rather than comparing the past policies with physical sector size, it appears more appropriate to examine the complete institutional setting for organic farming. The complexity of the organic farming concept necessitates this approach. Out of the three regimes, the regime analyses of the EU constituted a special case. Due to its supranational character, the CAP has always been a political battlefield, where trade-offs and package deals between member states and across different Community policies are common practice. The Commission’s proposals have been more radical and fundamental than those of the Council of Agricultural Ministers, or the European Council has been willing to accept. Even when the Commission has managed to introduce a new policy instrument, the member states have, as a rule, had a high degree of flexibility in interpreting and applying the respective regulations. It is therefore indisputable that the Commission’s sustainability rhetoric outweighs the policy practice of the CAP. Despite the dominance of market price support, there were several policy instruments, both Guarantee and Guidance, favouring extensification and farm diversification. However, these forms of support were either of a voluntary nature or they were only partly co-financed by the EU. In short, implementation of the measures was a matter of national discretion. Despite 40 years of CAP, the member states have been markedly free in setting policy accents at national level, and this has also applied to the later organic farming support payments. The fact is that the size of organic farming sector differs significantly across the EU-15. Obviously, more profound research would be needed to determine whether there is a positive correlation between organic sector size and European mountainous areas. Similarly, it would be interesting to examine whether regions with above-average alternative crop production, i.e. durum wheat, hard cheese or suckler cow production, record an above-average organic sector size. In the case of the EU support policy framework, the following conclusion can be drawn. 2. The CAP enabled but did not enforce rural development orientated support policy. Due to the vast amount of national discretion, the member states have been free to set

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their own policy. This, in turn, has resulted in strikingly different organic farming development at regional level. Due to the lack of common action, there is a tendency towards regional EU-15 organic havens. Climatic considerations apart, the long-term mainstream support policy orientation seems to suggest a distinct organic farming structure. In Austria and Finland, the structures of the organic farming sector are a mirror image of those of general mainstream agriculture. In Austria, the rural development orientated support policy helped to maintain the small and extensive mountain farmers in the sector. In addition to the special mountain farming programme, Austrian support policy integrated part-time farmers and provided support for farm diversification. The structure of the contemporary Austrian organic farming sector markedly reflects the policy orientation of the past. Owing to the vast pool of mountain farmers, a grassland dominated, mixed small-scale organic farming sector has evolved. In 1997, 94% of Austrian organic farms were located in the less favoured areas [33]. The structure of the contemporary Austrian organic farming sector is a direct outcome of the rural development orientation of past support policies. The Finnish agricultural support policy, on the other hand, centred on rationalisation and specialisation. While the Finnish settlement policy created farms in remote Eastern and Northern areas, those same farms were subjected to rationalisation measures from the 1970s onwards. Indeed it could be argued that regional specialisation alone, with a concentration of arable crops in the extreme south and livestock production in central Finland, hampered the later formation of mixed organic farming structures in Finland. From 1989 onwards, Finnish organic support policy blatantly enforced the production of organic arable crops. The eligibility rules required no complete conversion of crops plus livestock, and there were no distinct measures to support organic livestock farming. There was, moreover, no support for continuing or existing organic farmers. In the wake of the EU accession, the organic arable crops payments together with the extra price premium provided a way of buffering the loss in income, and conversion to organic farming was regarded as a new means of specialisation. It’s less favoured area status, apart, the Finnish share of land under organic arable crop production, was one of the highest in the EU-15 in 1997 [34]. While the majority of Finnish organic farmers are efficient, large scale, environmentally friendly arable crop producers, the largest relative share of organic farming areas can be found in southern Finland. The argument put forward can be extended to the EU. The regional differences in agricultural policy orientation have resulted in differing agricultural structures among the EU-15 [35]. Correspondingly, the structure of the organic farming sector also differs between various member states, such as between Denmark and Italy. As a result, the third conclusion can be formulated, namely

3. The structure of the contemporary organic farming sector appears to reflect the structures of mainstream agriculture. In turn, the outstanding agricultural structures are the outcome of past long-term support policies. The three conclusions have a common denominator, namely the importance of a long-term timescale. It is essential that the development of organic farming is observed and analysed from a long-term time perspective. An aggressive policy-push approach, as in the case of Finland, can rapidly inflate the size of the sector. However, organic support payments alone do not guarantee a favourable institutional setting. It is evident that the institutional setting strongly correlates with the general agricultural policy orientation. It is, therefore, imperative to know what, how and whom the agricultural policy has supported. The OSCE positive policy principles openly address these questions, so the 16 assessment criteria were chosen and formulated to reflect the OSCE principles. In comparison to the ranking based merely on organic farming sector size, the long-term support policy analyses based on the 16 assessment criteria resulted in a decidedly different picture with differing conclusions. References [1] In 1991 the Commission openly acknowledges that ‘‘80% of the support provided by FEOGA is devoted to 20% of farms which also account for the greater part of the land used in agriculture.’’, The development and future of the CAP. Brussels: Commission of the European Communities; 1991. COM(91)100 final. [2] Several studies imply that the opportunity costs to convert tend to increase with the degree of intensification and specialisation Michelsen J, Lynggaard K, Padel S, Foster C. Organic farming development and agricultural institutions in Europe: a study of six countries. In: Organic farming in Europe: economics and policy, vol. 9; 2001; Lampkin N, Padel S, Foster C. Organic farming. In: Brouwner, Lowe, editors. CAP regimes and the European countryside. CAB International; 2000. p. 221e38. [3] Michelsen J, et al. Organic farming development and agricultural institutions in Europe: a study of six countries. In: Organic farming in Europe: economics and policy 2001; Lampkin, et al. Organic farming. In: Brouwner, Lowe, editors. CAP regimes and the European countryside. CAB International; 2000. p. 221e38. [4] The assessing criteria were adopted from organic farming development path formulated by Michelsen J. et al. Michelsen J, Lynggaard K, Padel S, Foster C. Organic farming development and agricultural institutions in Europe: a study of six countries. In: Organic farming in Europe: economics and policy, vol. 9; 2001. [5] Bundesministerium fu¨r Land-und Forstwirtschaft. Bericht u¨ber die lage der o¨sterreichischen Landwirtschaft 1991. Vienna: Bundesministerium fu¨r Land-und Forstwirtschaft; 1992. [6] Michelsen J, Lynggaard K, Padel S, Foster C. Organic farming development and agricultural institutions in Europe: a study of six countries. In: Organic farming in Europe: economics and policy, vol. 9; 2001. [7] Suomen Asetuskokoelma. Laki maataloustuotannon tasapainottamisesta. Helsinki. No. 1261/89, 22.12.1989. [8] First in 2000 a working group pointed out that the lack of mixed organic farm structures, and there of resulting problems with fertility building phase, might hamper the profitability of organic crops farms. Maa-ja metsa¨talousministerio¨. In: Tyo¨ryhma¨muistio MMM, vol. 16. Helsinki: Luomustrategia; 2001. 14.11.2000 [9] Lampkin N, Foster C, Padel S, Midmore P. The policy and regulatory environment for organic farming in Europe. In: Organic farming in Europe, vol. 1. University of Hohenheim; 1999.

H.A. Lesjak / Journal of Cleaner Production 16 (2008) 1e11 [10] The policy evaluation matrix (PEM) consists of % PSE indicator, which measures the level of producer support as a ratio of gross receipts, of a PSE composition indicator, which measures the share of most distorting PSE forms of support, and of a NAC coefficient, which measures the degree of market orientation of the regime Organisation for Economic Cooperation and Development (OECD). Agricultural policies in OECD countries, monitoring and evaluation. Paris: Organisation for Economic Co-operation and Development (OECD); 2003. [11] Organisation for Economic Co-operation and Development (OECD). Agricultural policies in OECD countries, monitoring and evaluation. Paris: Organisation for Economic Co-operation and Development (OECD); 2003. [12] Whilst ‘‘the composition of support is measured by the share of the most distorting forms of support e market price support, payments based on output and payments based on input use e in gross farm receipts’’, the OECD measures the variation in support by ‘‘the coefficient of variation in the producer Nominal Assistance Coefficient across the commodities within the country.’’ The Nominal Assistance Coefficient (NAC) portrays, in return, the ‘‘ratio between the value of total gross farm receipts including support, and production valued at world market prices without support’’ Organisation for Economic Co-operation and Development (OECD). Agricultural policies in OECD countries, monitoring and evaluation. Paris: Organisation for Economic Co-operation and Development (OECD); 2003. [13] A construction of similar time series for time period 1995 to 2002 is not possible, as the OECD refrains from disintegrating data on the EU-15. [14] Kettunen L. Recent development in agricultural prices and incomes in Finland. Maatalouden taloudellinen Tutkimuslaitos, Research Report No. 27. Helsinki; 1974. [15] European Council. Council Regulation (EEC) No. 1097/88 of 25 April 1988 amending Regulation No. 2727/75 on the common organisation of the market in cereals, Brussels, 29.4.88: OJ L110, and Council Regulation (EEC) No. 2066/92 of 30 June 1992 amending Regulation 805/68 on the common organisation of the market in beef and veal. Brussels, 30.7.1992: OJ L215. [16] Bundesgesetz vom 30.6.1949 Nr. 166, u¨ber die Regelung von Preisen und Entgelten, in der Fassung der Bundesgesetz BGBl Nr. 804/1974, Vienna, 1974:804/1974. [17] Organisation for Economic Co-operation and Development (OECD). Distributional effects of agricultural support in selected countries. Paris: Organisation for Economic Co-operation and Development (OECD); 22.11.1999. AGR/CA(99)8/FINAL. [18] Suomen Asetuskokoelma. Valtioneuvoston pa¨a¨to¨s viljelijo¨ille maksettavasta pinta-alalisa¨sta¨. Helsinki, 8.3.1962:225/1962. ¨ sterreichs. Vienna: [19] Pra¨sidentenkonferenz der Landwirtschaftskammern O Agrarpolitik; April 1992. 91/92. [20] Portugal Luis. Methodology for the measurement of support and use in policy evaluation, 28. Paris: Organisation for Economic Co-operation and Development (OECD), www.oecd.org/pdf/M00031000/M0003175.pdf; July 2002 [accessed 12.9.03]. [21] European Council. Council Regulation No. 797/85 of 12 March 1985 on improving the efficiency of agricultural structures. Brussels: European Council; 30.3.1985. OJ L93.

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[22] Bundesministerium fu¨r Land-und Forstwirtschaft. Sonderrichtlinien fu¨r die Gewa¨hrung von Zinsenzuschu¨ssen zu Krediten fu¨r Investitionsmaßnahmen in der Land-und Forstwirtschaft. Vienna: Bundesministerium fu¨r Land-und Forstwirtschaft; 30.12.1982. Zl 28.001/10-II/8/83. [23] Suomen Asetuskokoelma. Maatilalaki 188/77. Helsinki, 18.2.1977: 188/77. [24] Bundesministerium fu¨r Land-und Forstwirtschaft. Bericht u¨ber die Lage der o¨sterreichischen Landwirtschaft 1989. Vienna: Bundesministerium fu¨r Land-und Forstwirtschaft; 1990. [25] According Wiesinger, the take up of a second occupation and thereof resulting additional income sources often constituted the only real possibility for guaranteeing the survival of a farm in long term bases. In 1995 65,8 % of Austrian farmers were part time farmers in regions such as south Burgenland or Tiroler Oberland the share amounted over 80%. Wiesinger G. Neue soziale Aufgaben fu¨r die Landwirtschaft, Zukunft in Aussicht. Wien: Bundesanstalt fu¨r Bergbauernfragen; 2000 [26] Bundesministerium fu¨r Land-und Forstwirtscaft. Vienna, 9.3.1970: Zl.25.000-II/5c/70 and Sonderrichtlinien fu¨r die Gewa¨hrung von Zinsenzuschu¨ssen zu Krediten fu¨r Investitionsmaßnahmen in der Land-und Forstwirtschaft, Richtlinien fu¨r die Abwicklung von zinsverbilligten Darlehen fu¨r Investitionsmaßnahmen in der Land-und Forstwirtschaft. Vienna: AIK-Aktion 1983; 1983. 30.12.1982:Zl: 28.001/ 10-II/8/83. [27] Suomen Asetuskokoelma. Maatila-asetus 385/77. Helsinki, 13.5.1977: 385/77. [28] Bundesministerium fu¨r Land-und Forstwirtschaft. Sonderrichtlinien fu¨r Durchfu¨hrung der landwirtschaftlichen Regionalfo¨rderung. Vienna: Bundesministerium fu¨r Land-und Forstwirtschaft; 1971. 1971:Zl 37.000-II/ 5a/2/71. [29] Bundesministerium fu¨r Land-und Forstwirtschaft. Sonderrichtlinien fu¨r die Durchfu¨hrung des Bergbauernsonderprogrammes. Vienna: Bundesministerium fu¨r Land-und Forstwirtschaft; 1973. Zl. 38.300e5a/ 2/73. [30] Sauli L. MTK ja Suomen maatalouspolitiikka, Maatalousyhteyskunnasta teollisuusvaltioksi 1950e1980. Helsinki: Kirjayhtyma¨; 1987. [31] Valtiovarainministerio¨. Valtion Tulo-ja Menoarvioesitys 1992. Helsinki: Valtiovarainministerio¨; 1991. [32] European Council. Council Directive 75/268/EEC of 28.April 1975 on mountain and hill farming and farming in certain less-favoured areas. Brussels: European Council; 19.5.1975. OJ L128. [33] Whereas 10% of mountain farmers in zone 1 accounted for organic farmers, 15.8% of all farms in zone 2, 22.1% in zone 3 and 32.5% in zone 4 had converted to organic farming in 1997. Michael Groier. ¨ sterreich Entwicklung und Bedeutung des biologischen Landbaus in O in international Kontext. Wien: Bundesanstalt fu¨r Bergbauernfragen; 1988. Facts & Features No. 19. [34] Foster C, Lampkin N. Organic and in-conversion land area, holdings, livestock and crop production in Europe. FAIR3-CT96e1794, Task 2.1: Technical Deliverable: Riic, Final report; October 2000. [35] Commission of the European Communities. Organic farming in the EU, facts and figures. Brussels: Commission of the European Communities; 2002.