An economic-environmental model of an organic dairy farm for an evaluation of sustainability in agriculture

The central issue of this study is to evaluate the economic and environmental sustainability of an organic dairy farm. Moreover, we try to give a technical support for future agricultural policies. We used a linear programming model to simulate the environmental, economic, technical and organisational farm results. We prepared two versions of the model, one for the present situation of the farm (organic version) and another for the situation prior to conversion from the conventional to the organic agriculture (conventional version). The objective function of the model optimises the farm gross income. We present the general structure of the model and specify environmental aspects. In particular, we consider three main environmental components: nitrogen cycle into the agroecosystem, soil erosion and non-replaceable energy consumption. The results of the simulation show how the organic method achieves an economic efficiency level equal to the conventional one, due to the favourable price the farm could obtain for the organic milk. Moreover the organic method generates some relevant environmental effects. We calculated the marginal and average production costs of environmental externalities through parametric linear programming. We suggest a new agricultural policy based on the costs of environmental externalities.