As indicated earlier in the report, Annex I shows the results produced when the financial evaluation and sensitivity analysis are based on the assumption that public subsidies are available for farmers who earn their profits through an organic farming system.
The only new factor introduced into our analysis by this consideration is the incorporation of certain extraordinary receipts during the years in which the subsidy is granted to farmers. In accordance with the Order of the Department of Agriculture (Order of 22 April 1998), on the application of the said subsidies, the following Table shows the extraordinary receipts that it would generate.
Table A
Extraordinary receipts generated by subsidies
| Year of receipt | Subsidies (Pta./Ha) |
| Year 10 | 60 000 |
| Year 11 | 48 000 |
| Year 12 | 36 000 |
| Year 13 | 36 000 |
| Year 14 | 36 000 |
Source: Order of 22 April 1998, of the Department of Agriculture, Fisheries and Food.
Following the procedure described in the fourth part of the present report, although working solely under Hypothesis B of conventional saturated markets, the data in Table A are combined with those in the aforementioned fourth part of the report. The results obtained are shown below.
Table B
Results for growing oranges and mandarins with subsidy (Hypothesis B)
| Organic orange | Organic mandarin | |||
| IRR | 10.43% | IRR | 16.11% | |
| Discount rate | NCV | Recovery Period | NCV | Recovery Period |
| 3% | 1 870 174 | 14 | 6 254 346 | 8 |
| 4% | 1 433 567 | 14 | 5 240 104 | 8 |
| 5% | 1 064 567 | 15 | 4 378 598 | 8 |
| 6% | 751 382 | 16 | 3 643 474 | 9 |
| 7% | 484 480 | 17 | 3 013 393 | 9 |
| 8% | 256 127 | 19 | 2 470 995 | 9 |
Source: Authors
Table C
Sensitivity analysis for organic oranges and mandarins, with subsidy
| % variation IRR | % variation IRR | ||
| % change receipts | Organic orange | % change payments | Organic mandarin |
| -20 | -94.00 | -20 | 43.28 |
| -15 | -55.59 | -15 | 32.38 |
| -10 | -32.46 | -10 | 21.56 |
| -5 | -14.91 | -5 | 10.80 |
| 0 | 0.00 | 0 | 0.00 |
| 5 | 13.48 | 5 | -11.10 |
| 10 | 26.03 | 10 | -23.08 |
| 15 | 37.89 | 15 | -37.05 |
| 20 | 49.18 | 20 | -54.88 |
| Average elasticity |
16.02 | Average elasticity |
-2.70 |
Source: Authors.
