Estimation of Economic Effects of Processing of Organic Products in the case of Family Farms

Subić, Jonel and Jeločnik, Marko and Kovačević, Vlado and Grujić Vučkovski, Biljana (2022) Estimation of Economic Effects of Processing of Organic Products in the case of Family Farms. In: Course for trainers: Entrepreneurial innovation in agri-food science. Alexandru Ioan Cuza University of Iasi, Romania, Institute of Agricultural Economy, Belgrade, Iași ; Belgrade, pp. 175-195. ISBN 978-86-6269-112-5

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Abstract

Global trends in the sector of agriculture have forced family farms to look for strengthening of their economic sustainability or even for survival in one of the available alternatives for creating added value. Among the adequate possibilities for creating added value at the farm level, both the implementation of organic production system and additional offering of organic food products gained solely from processing of organic agricultural products, could be found. In line with entrepreneurial spirit and creation of additional income at the farm level, the aim of the chapter is reflected in the assessment of economic effects (based on variable costs) obtained by the use of identical capacities in the processing of conventionally and organically produced apples. In other words, a comparative analysis of the effects of substitution of the production input, with the use of processing capacities for the production of apple chips on a family farm, would be performed. According to the topic of the paper, the evaluation of the results should show whether there is a significant advantage in production of apple chips, obtained from organic apples over conventional raw material base. Substitution of used inputs generates increase in the contribution margin for almost 7.8 times, ensuring thus the boost in the overall farm profit.

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