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Comparing the Profitability of Organic and Conventional Production in Family Farming: Empirical Evidence From Brazil

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  • Froehlich, Anderson G.
  • Melo, Andrea S.S.A.
  • Sampaio, Breno

Abstract

Several studies have compared the profitability of organic and conventional producers, but present very conflicting results. Although in the majority of these papers selection bias due to observables is accounted for, the possibility of selection based on unobservables has been largely overlooked. In this paper, we compare these two types of producers using a large and unique data of about 4.2 million family farmers in Brazil. Standard propensity score matching techniques are used together with the procedure recently developed by Oster (forthcoming) to address concerns about omitted variables. Our results confirm the working hypothesis that organic producer's profits are lower than conventional ones.

Suggested Citation

  • Froehlich, Anderson G. & Melo, Andrea S.S.A. & Sampaio, Breno, 2018. "Comparing the Profitability of Organic and Conventional Production in Family Farming: Empirical Evidence From Brazil," Ecological Economics, Elsevier, vol. 150(C), pages 307-314.
  • Handle: RePEc:eee:ecolec:v:150:y:2018:i:c:p:307-314
    DOI: 10.1016/j.ecolecon.2018.04.022
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    Keywords

    Family farming in Brazil; Profitability of organic farming; Propensity score; Selection on unobservables;

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • D29 - Microeconomics - - Production and Organizations - - - Other
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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