Economic growth of farms: An empirical analysis on organic farming
This article investigates which factors influence the economic growth of organic farms. Organic farming has experienced a substantial growth in Germany since the beginning of the 1990s until today. Most organic farms are concentrated in the southern region of the country, Bavaria and Baden-Wuerttemberg. While some of these farms have expanded their business size, others have contracted, reconverted to conventional or ceased to operate. Using a panel data of 318 farms and a System GMM method, the economic growth of organic farms is analyzed. Regression results suggest that organic farms with high revenue from agriculture are less likely to grow than smaller farms. Growth is influenced by livestock intensity, multiple job holding, share of grasslands areas, soil quality and agri-environmental payments for organic farming.
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