Efficiency Analysis of Organic Farming Systems A Review of Concepts, Topics, Results and Conclusions

This article summarizes the literature on efficiency and productivity of organic farming. We distinguish between studies that concentrate on specific problems of the organic sector and studies that compare conventional and organic farms. Organic farms can on average improve their efficiency by 21%-points (SFA) and 27%-points (DEA). In comparing efficiency and productivity of organic with conventional farms sample selection is a major challenge, since the organic farms have a different farm-structure and are often represented by a relatively small number of observations. In studies taking into account selectivity problems organic farms are on average 4%-points less efficient than conventional farms. In four of five studies, organic farms are less productive than conventional farms and productivity is for about 20%-points lower than on conventional farms, which fits the results of yield comparisons. Efficiency influences the decision to convert to organic farming, but it is an empirical question, whether this influence is positive or negative. The impact of subsidies on farm level efficiency is found to be negative in most studies. Organic farms show the same or a higher degree of efficiency if environmental variables are taken into account.