Journal of Food, Agriculture and Environment

Assessing financial incentives for Greek dairy sheep farmers

Author(s):

Irene Tzouramani ¹*, Alexandra Sintori ², Angelos Liontakis ², George Alexopoulos ²

Recieved Date: 2012-02-12, Accepted Date: 2012-05-02

Abstract:

The importance of sheep farming in Greece and the increasing demand for specialised and traditional products create positive opportunities for the reorganisation of the dairy sheep sector during the current economic crisis. New policy measures have been introduced to transform Greek dairy sheep farming into a more innovative, environmentally friendly and economically sustainable sector. However, farmers will adopt these measures only if they are confident about their future returns. Under uncertain conditions, investment in agriculture involves a risk, which plays a significant role in farmers’ decision making. Well-designed policy schemes which take into account the dynamic nature of the agricultural industry and that reinforce the sector will determine the right framework for understanding the investment behaviour of farmers. This study examines the effects of income variability on decisions to adopt new techniques and production systems by dairy sheep farmers in Greece. More specifically, two investment options for organic and conventional Greek dairy sheep farmers are evaluated, both for newcomers to the industry who undertake large- scale investments and for existing farmers who improve their farms under small-scale investment programs. Real options analysis reveals that investment in dairy sheep farming is viable if attractive economic incentives are offered to farmers to compensate for the risk and uncertainty of the activity. Recommended financial incentives will have a significant impact on the dairy sheep sector by encouraging innovation, increasing competitiveness, preserving ecosystems and promoting rural development. 

Keywords:

Agricultural policy, organic farming, sheep farming, livestock, real options

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Journal: Journal of Food, Agriculture and Environment
Year: 2012
Volume: 10
Issue: 2
Category: Agriculture
Pages: 493-499

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