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Comparing the Profitability of Organic and Conventional Production in Family Farming: Empirical Evidence From Brazil

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  • Froehlich, Anderson G.
  • Melo, Andrea S.S.A.
  • Sampaio, Breno

Abstract

Several studies have compared the profitability of organic and conventional producers, but present very conflicting results. Although in the majority of these papers selection bias due to observables is accounted for, the possibility of selection based on unobservables has been largely overlooked. In this paper, we compare these two types of producers using a large and unique data of about 4.2 million family farmers in Brazil. Standard propensity score matching techniques are used together with the procedure recently developed by Oster (forthcoming) to address concerns about omitted variables. Our results confirm the working hypothesis that organic producer's profits are lower than conventional ones.

Suggested Citation

  • Froehlich, Anderson G. & Melo, Andrea S.S.A. & Sampaio, Breno, 2018. "Comparing the Profitability of Organic and Conventional Production in Family Farming: Empirical Evidence From Brazil," Ecological Economics, Elsevier, vol. 150(C), pages 307-314.
    • Handle: RePEc:eee:ecolec:v:150:y:2018:i:c:p:307-314
    DOI: 10.1016/j.ecolecon.2018.04.022
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    2. Michael Grimm & Nathalie Luck & Franziska Steinhübel, 2023. "Consumers' willingness to pay for organic rice: Insights from a non‐hypothetical experiment in Indonesia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(1), pages 83-103, January.
    3. Aihounton, Ghislain & Henningsen, Arne, 2021. "Organic Farming and Food and Nutrition Security," 2021 Conference, August 17-31, 2021, Virtual 315413, International Association of Agricultural Economists.
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    5. Hirsch, Stefan & Barissoul, Ayoub & Möhring, Niklas & Koppenberg, Maximilian, 2024. "Market power, profitability and the decision to exit organic dairy farming in the EU," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344258, International Association of Agricultural Economists (IAAE).
    6. Ghislain B. D. Aïhounton & Arne Henningsen, 2024. "Organic Farming and Happiness: A Path Analysis," IFRO Working Paper 2024/01, University of Copenhagen, Department of Food and Resource Economics.
    7. Ghislain B. D. Aihounton & Arne Henningsen, 2023. "Does Organic Farming Jeopardize Food and Nutrition Security?," IFRO Working Paper 2023/02, University of Copenhagen, Department of Food and Resource Economics.
    8. Elodie Letort & Aude Ridier, 2022. "The economic performance of transitional and non-transitional organic dairy farms: A panel data econometric approach in Brittany [Les performances économiques des exploitations laitières en agricul," Working Papers hal-03635268, HAL.
    9. Bonisoli, Lorenzo & Piedra-Muñoz, Laura & Galdeano-Gómez, Emilio & Pérez Mesa, Juan Carlos, 2019. "Benchmarking agri-food sustainability certifications: evidences from applying SAFA in the Ecuadorian banana agri-system," MPRA Paper 119956, University Library of Munich, Germany.
    10. Agnieszka Brelik & Barbara Golebiewska & Justyna Franc-Dabrowska, 2020. "Co-Financing of Organic Farming in the EU: Necessity or Fantasy?," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 547-557.
    11. Pépin, Antonin & Morel, Kevin & van der Werf, Hayo M.G., 2021. "Conventionalised vs. agroecological practices on organic vegetable farms: Investigating the influence of farm structure in a bifurcation perspective," Agricultural Systems, Elsevier, vol. 190(C).
    12. Christian Bux & Mariarosaria Lombardi & Erica Varese & Vera Amicarelli, 2022. "Economic and Environmental Assessment of Conventional versus Organic Durum Wheat Production in Southern Italy," Sustainability, MDPI, vol. 14(15), pages 1-14, July.
    13. Lassalas, Marie & Duvaleix, Sabine & Latruffe, Laure, 2021. "Stringency of environmental standards, yield, product quality and revenue: Evidence from French wheat production," 2021 Conference, August 17-31, 2021, Virtual 315184, International Association of Agricultural Economists.
    14. Aïhounton, Ghislain B.D. & Henningsen, Arne, 2024. "Does organic farming jeopardize food security of farm households in Benin?," Food Policy, Elsevier, vol. 124(C).
    15. Chang, Yun-Cih & Luh, Yir-Hueih & Hsieh, Ming-Feng, 2023. "Economic Effects of Organic Farming in Taiwan: Empirical Evidence from Population-Based Farm Household Data," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334542, Agricultural Economics Society - AES.
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    More about this item

    Keywords

    Family farming in Brazil; Profitability of organic farming; Propensity score; Selection on unobservables;
    All these keywords.

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • D29 - Microeconomics - - Production and Organizations - - - Other
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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