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Determinants of Economic Growth in Organic Farming: The Case of Bavaria and Baden-Wuerttemberg

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  • Brenes Muñoz, Thelma
  • Lakner, Sebastian
  • Brümmer, Bernhard

Abstract

The organic sector in Germany has experienced a substantial growth since the beginning of the 1990s until today. During this process of expansion, most organic farms have grown in terms of factor endowment, while others have disappeared or reconverted to conventional agriculture. This paper investigates the potential determinants of farms growth in the organic sector. This paper models potential factors that might have an impact on the economic growth of 332 organic farms in Bavaria and Baden-Wuerttemberg. The econometric model was developed based on ‘Gibrat’s Law’, using a fixed effect method (FE). The results suggest that direct marketing and livestock intensity significantly influence farm growth. In addition, less efficient farms grew faster than more efficient ones. This outcome can be explained by the economic pressure on inefficient firms for adaptation during the growth and survival process.

Suggested Citation

  • Brenes Muñoz, Thelma & Lakner, Sebastian & Brümmer, Bernhard, 2011. "Determinants of Economic Growth in Organic Farming: The Case of Bavaria and Baden-Wuerttemberg," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114270, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae11:114270
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    References listed on IDEAS

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    1. Villatoro, Mario & Langemeier, Michael, 2006. "Factors Impacting Farm Growth," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
    2. Kostov, Philip & Patton, Myles & Moss, Joan E. & McErlean, Seamus, 2005. "Does Gibrat's Law Hold Amongst Dairy Farmers in Northern Ireland?," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24775, European Association of Agricultural Economists.
    3. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
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    6. Bremmer, Johan & Oude Lansink, Alfons G.J.M. & Olson, Kent D. & Baltussen, Willy H.M. & Huirne, Ruud B.M., 2002. "Analysis of Farm Development in Dutch Agriculture and Horticulture," 13th Congress, Wageningen, The Netherlands, July 7-12, 2002 7025, International Farm Management Association.
    7. Ayal Kimhi, 2000. "Is Part-Time Farming Really a Step in the Way Out of Agricultural?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 38-48.
    8. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-674, August.
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    10. Cornelis Gardebroek & Kedir N. Turi & Jo H.M. Wijnands, 2010. "Growth dynamics of dairy processing firms in the European Union," Agricultural Economics, International Association of Agricultural Economists, vol. 41(3-4), pages 285-291, May.
    11. Offermann, Frank & Nieberg, Hiltrud & Zander, Katrin, 2009. "Dependency of organic farms on direct payments in selected EU member states: Today and tomorrow," Food Policy, Elsevier, vol. 34(3), pages 273-279, June.
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    Keywords

    farm-growth; Gibrat’s law; technical efficiency; direct marketing; Farm Management;

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