Consumer Demand for Organic Food Groups and Implications for Farmers’ Revenues under the Organic Land Subsidy Scheme: The Case of Denmark

Abstract

We fit a family of differential demand systems to Danish organic food data and use the selected model’s parameters to calculate conditional expenditure and price elasticities for five organic food groups (cereals, meats, dairy products, fruits and vegetables, and other organic foods) to evaluate the implications of the Danish Organic Land Subsidy Scheme for organic farmers. Simulations indicate that, without conversion subsidies, producers of the five organic food groups would have experienced disproportionate changes in revenues due to higher nonsubsidized organic food prices. Producers of meats and other organic foods would lose most in revenues, followed by fruit and vegetable producers.