Premium
Production Risk and Technical Efficiency in Organic and Conventional Agriculture – The Case of Arable Farms in Germany
Author(s) -
Tiedemann Torben,
LataczLohmann Uwe
Publication year - 2013
Publication title -
journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.157
H-Index - 61
eISSN - 1477-9552
pISSN - 0021-857X
DOI - 10.1111/j.1477-9552.2012.00364.x
Subject(s) - arable land , production (economics) , inefficiency , organic farming , economics , agriculture , stochastic frontier analysis , matching (statistics) , production–possibility frontier , agricultural economics , environmental science , agricultural science , mathematics , geography , microeconomics , statistics , archaeology
This paper quantifies the importance of production risk and technical efficiency as two possible sources of production variability in German organic and conventional farming. Determinants of production risk and inefficiency are investigated based on a combination of Just and Pope’s stochastic production framework and a Stochastic Frontier Analysis. The empirical analysis is conducted using a balanced panel of farm records from 1999/2000 to 2006/2007 on 37 organic and conventional arable farms, respectively. Euclidian‐Distance‐Matching is used to identify for each organic farm a conventional counterpart with similar structural features. Results indicate that output variability in both production technologies is mainly caused by production risk. Land and labour are identified as risk‐increasing inputs in both farm types whereas higher capital endowment, seed costs and soil quality have risk‐reducing effects.