Stefanos A. Nastis, Anastasios Michailidis, Konstadinos Mattas

Department of Agricultural Economics, School of Agriculture, Aristotle University of Thessaloniki, 54124 Greece.

Abstract

This paper analyses the impact that the CAP financial support on selected organic crops has on agrobiodiversity under production uncertainty. A stochastic production function is employed and estimated to assess whether risk-averse farmers hedge risk by diversifying their portfolio of crops. The model is applied to farm-level data of organic crop farms in Greece. Organic farming financial support, in the form of agricultural subsidies for the cultivation of organic crops, poses a double-edged sword: on one side, organic farming is considered an agrobiodiversity enhancing cultivation method; on the other side, financial support may reduce agrobiodiversity if farmers decide it is optimal to cultivate only the few, supported crops. The study shows that risk aversion leads to agrobiodiversity conservation. However, the existence of CAP financial support on selected crops decreases the relationship between revenue risk management and agrobiodiversity, indirectly leading to agrobiodiversity loss.