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Comparison of the Economic Performance between Organic and Conventional Dairy Farms in the Swiss Mountain Region Using Matching and Stochastic Frontier Analysis

Author

Listed:
  • Moritz Flubacher
  • George Sheldon

    (University of Basel, Faculty of Business and Economics)

  • Adrian Müller

    (ETH Zurich, Chair of Environmental Policy and Economics)

Abstract

This thesis evaluates and compares the economic performance across organic and conventional dairy farms in the Swiss mountain region. To mitigate possible self-selection bias, matched groups of organic and conventional dairy farms with similar production possibilities are determined using exact and propensity score matching. Stochastic frontier analysis is then applied to estimate productivity differentials and technical efficiencies. Results reveal that organic farms are more productive converting input (labour, land, intermediate costs, capital) into output (revenues) while there are no significant differences in technical efficiencies. These findings suggest that the organic milk price overcompensates for lower yields in organic production leading to higher incomes. Thus switching into organic farming in the low intensive mountain region can improve the economic situation of conventional dairy farmers.

Suggested Citation

  • Moritz Flubacher & George Sheldon & Adrian Müller, 2015. "Comparison of the Economic Performance between Organic and Conventional Dairy Farms in the Swiss Mountain Region Using Matching and Stochastic Frontier Analysis," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 7(1), pages 76-84.
    • Handle: RePEc:cha:ysa001:v:7:y:2014:i:1:p:76-84
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    References listed on IDEAS

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    Cited by:

    1. Maria Raimondo & Francesco Caracciolo & Concetta Nazzaro & Giuseppe Marotta, 2021. "Organic Farming Increases the Technical Efficiency of Olive Farms in Italy," Agriculture, MDPI, vol. 11(3), pages 1-15, March.
    2. Zhong, Shen & Li, Junwei & Qu, Yi, 2022. "Green total factor productivity of dairy cow in China: Key facts from scale and regional sector," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    3. Rebecca Buttinelli & Raffaele Cortignani & Gabriele Dono, 2021. "Financial sustainability in Italian Organic Farms: An analysis of the FADN Sample," Economia agro-alimentare, FrancoAngeli Editore, vol. 23(3), pages 1-32.
    4. Bang, Rasmus & Hansen, Bjørn Gunnar & Guajardo, Mario & Sommerseth, Jon Kristian & Flaten, Ola & Asheim, Leif Jarle, 2024. "Conventional or organic cattle farming? Trade-offs between crop yield, livestock capacity, organic premiums, and government payments," Agricultural Systems, Elsevier, vol. 218(C).

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    More about this item

    Keywords

    Stochastic Frontiers; Technical Efficiency; Productivity; Propensity Score Matching; Self Selection; Dairy; Organic;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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