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Farm‐level determinants of product conversion: Organic milk production

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  • Tristan Skolrud

Abstract

We investigate the role of technology in the decision of dairy farmers to convert to organic production methods. We measure the characteristics of the production technology using data from the USDA Agricultural Resource Management Survey and a recently developed functional form that allows for a global approximation to the unknown distance function without compromising approximation at the data boundaries. Conventional dairies with lower technical efficiency, higher returns to scale, and the ability to easily substitute away from restricted inputs are more likely to convert to organic production. Findings suggest further consolidation in the conventional industry as low‐performing farms exits for the organic industry. Nous étudions le rôle de la technologie dans la décision des producteurs laitiers de se convertir aux méthodes de production biologique. Nous mesurons les caractéristiques de la technologie de production en utilisant les données de l'USDA Agricultural Resource Management Survey et une forme fonctionnelle récemment développée qui permet une approximation globale de la fonction de distance inconnue sans compromettre l'approximation aux limites des données. L'entreprise laitière conventionnelle ayant une efficacité technique moindre, des rendements d'échelle plus élevés et la possibilité de remplacer facilement des intrants restreints ont plus de chances de se convertir à la production biologique. Les résultats suggèrent une consolidation plus poussée de la production conventionnelle, alors que les exploitations moins performantes quittent pour la production biologique.

Suggested Citation

  • Tristan Skolrud, 2019. "Farm‐level determinants of product conversion: Organic milk production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 67(3), pages 261-281, September.
  • Handle: RePEc:bla:canjag:v:67:y:2019:i:3:p:261-281
    DOI: 10.1111/cjag.12201
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