Vincent de Leijster

77 Almond farm profitability under agroecological management 4 compensate for the costs of greening measures in Italian arable farms in mountainous, hilly and flat regions (Vanni et al., 2013). They concluded that the greening payment was sufficient to compensate for greening investments for the majority of the farmers in the mountainous region, but not for more than 75% of the farmers in the hilly and flat regions, since they experienced net losses of up to €303 ha -1 , which is similar to the finance gap in our study. Our study showed that opportunity costs of NT and GM can be compensated by paying 45% and 27% higher market prices, respectively, which equals to €386.95 ha -1 y - for GM and €644.09 ha -1 y -1 for NT. This is 5 to7 times the current price premiums received by some pioneer almond farmers of the farmers’ cooperation ‘Almendrehesa’ that sells organically produced almonds (5-7% premium; personal communication from Almendrehesa staff). We also found that more compensation should be given via price premiums than via public greening payments to match the breakeven point of CT’s NPV. The compensation through price premiums was given in the years that the farm is productive, which was later in the project and therefore the cash flows had lower net revenues early in the project lifetime. The values obtained early in a project weigh more because of the discount approach that is characteristic for NPV and therefore the amount needed to compensate for the opportunity costs through price premiums was higher. Also, price premiums were more effective when yield was higher and hectare-based compensation was more effective when costs were lower, but these effects resulted in negligible differences between treatments in our case study. Sgroi et al. (2015) demonstrated that Italian organic olives had higher long-term profitability, despite having 26% lower yields than conventional olive orchards, which is a larger yield gap than found in our study. These Italian organic olive farmers received 70% more subsidies and a 21% higher price than the conventional olive farmers in that region, but also had 13% lower operational costs. According to our model, a 21% price premium combined with an 70% additional public greening payment would also make GM more profitable than CT, but this would not yet make NT more profitable (Figure 4-3.c). Thus, opportunity costs can be compensated with public greening payments and price premiums, but these incentives would need to be higher than what is currently practiced. In our case study the mainstream reference management practice of the almond orchards, organic conventional tillage, already receives both higher subsidy and a price premium for omitting chemical input use compared to the less widespread, but still common, non-organic conventional tillage management. The production of almonds without chemical inputs is an accessible option in this region because chemical fertilizers are barely used, and large-scale incidence of pests is not common. As a result of organic certification, farmer’s income from subsidies increases from about €120 ha -1 to €230 ha -1 , and market value of shelled almond