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Technical Efficiency in Organic Farming: An Application on Italian Cereal Farms Using a Parametric Approach

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  • Madau, Fabio A.

Abstract

A stochastic frontier production model was applied to estimate technical efficiency in a sample of Italian organic and conventional cereal farms. The main purpose was to assess which production technique revealed higher efficiency. Statistical tests on the pool sample model suggested that differences between the two cultivation methods were significant from a technological viewpoint. Separate analyses of two sub-samples (93 and 138 observations for organic and conventional farms, respectively) found that conventional farms were significantly more efficient than organic farms, with respect to their specific technology (0.892 vs. 0.825). This implies that organic (conventional) cereal farmers could increase their income to 99.19 €/ha (40.95 €/ha). Analysis also estimated that land was the technical input with the highest elasticity for both technologies. Furthermore, findings indicated that 63.7% of the differentials between observed and best-practice output was explained by technical inefficiency for the conventional group, while this value was close to unity for organic farms. Some policy implications can be drawn from these findings.

Suggested Citation

  • Madau, Fabio A., 2005. "Technical Efficiency in Organic Farming: An Application on Italian Cereal Farms Using a Parametric Approach," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24545, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae05:24545
    DOI: 10.22004/ag.econ.24545
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    1. Sauer, J. & Park, T. & Graversen, J., 2008. "Organic Farming in Denmark – Productivity, Technical Change and Market Exit," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 43, March.
    2. Gauri Khanna, 2006. "Technical Efficiency in Production and Resource Use in Sugar Cane: A Stochastic Frontier Production Function Analysis," IHEID Working Papers 15-2006, Economics Section, The Graduate Institute of International Studies.
    3. Sauer, Johannes & Graversen, Jesper T. & Park, Timothy A., 2006. "Breathtaking or Stagnating? - Productivity, Technical Change and Structural Dynamics in Danish Organic Farming," 2006 Annual meeting, July 23-26, Long Beach, CA 21481, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Sauer, Johannes & Park, Tim, 2009. "Organic farming in Scandinavia -- Productivity and market exit," Ecological Economics, Elsevier, vol. 68(8-9), pages 2243-2254, June.
    5. Arandia Miura, Amaia & Aldanondo-Ochoa, Ana, 2008. "Social Versus Private Efficiency: A Comparison of Conventional and Organic Farming Systems in Vineyard Production," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44416, European Association of Agricultural Economists.
    6. Charyulu Kumara D. & Biswas, Subho, 2010. "Economics and Efficiency of Organic Farming vis-à-vis Conventional Farming in India," IIMA Working Papers WP2010-04-03, Indian Institute of Management Ahmedabad, Research and Publication Department.
    7. Ivana Brožová & Jiří Vaněk, 2013. "Assessment of economic efficiency of conventional and organic agricultural enterprises in a chosen region," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 61(2), pages 297-307.

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