IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i4p1304-d142759.html
   My bibliography  Save this article

The Effects of Diversification Activities on the Technical Efficiency of Organic Farms in Switzerland, Austria, and Southern Germany

Author

Listed:
  • Sebastian Lakner

    (Department of Agricultural Economics and Rural Development, University of Göttingen, Platz der Göttinger Sieben 5, 37073 Göttingen, Germany)

  • Stefan Kirchweger

    (Institute of Agricultural and Forestry Economics, Department of Economics and Social Sciences, University of Natural Resources and Life Sciences, Vienna, Feistmantelstraße 4, 1180 Vienna, Austria)

  • Daniel Hoop

    (Division for Competitiveness and System Evaluation, Agroscope, Tänikon 1, 8356 Ettenhausen, Switzerland)

  • Bernhard Brümmer

    (Department of Agricultural Economics and Rural Development, University of Göttingen, Platz der Göttinger Sieben 5, 37073 Göttingen, Germany)

  • Jochen Kantelhardt

    (Institute of Agricultural and Forestry Economics, Department of Economics and Social Sciences, University of Natural Resources and Life Sciences, Vienna, Feistmantelstraße 4, 1180 Vienna, Austria)

Abstract

The diversification of farms can be a result of multifunctional farming, however, in some cases at the cost of lower farm efficiency. In our paper we investigate the influence of para-agricultural diversification on productivity and the technical efficiency of organic farms in Austria, Switzerland, and Southern Germany. We show the benefits and drawbacks of diversification for organic farms, which go beyond the core agricultural production (para-agriculture). We do this by estimating a Stochastic Frontier (SF) combined with a metafrontier model. The data-set consists of bookkeeping data with 1704 observations in the years 2003 to 2005. Para-agricultural diversification activities have a significant effect on both productivity and technical efficiency of organic farms: The farm output in Austria and Switzerland is positively influenced by diversification, whereas we observe a rather small effect in Southern Germany. On the other hand, diversification can reduce farms’ technical efficiency, as it is the case in Switzerland and Germany. Furthermore, our study confirms previous results that agricultural subsidies significantly influence the technical efficiency of organic farms. We also show expected changes of input use driven by increased farm diversification.

Suggested Citation

  • Sebastian Lakner & Stefan Kirchweger & Daniel Hoop & Bernhard Brümmer & Jochen Kantelhardt, 2018. "The Effects of Diversification Activities on the Technical Efficiency of Organic Farms in Switzerland, Austria, and Southern Germany," Sustainability, MDPI, vol. 10(4), pages 1-18, April.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:4:p:1304-:d:142759
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/4/1304/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/10/4/1304/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Purdy, Barry M. & Langemeier, Michael R. & Featherstone, Allen M., 1997. "Financial Performance, Risk, And Specialization," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(1), pages 1-13, July.
    2. Mishra, Ashok K. & El-Osta, Hisham S. & Johnson, James D., 1999. "Factors Contributing To Earnings Success Of Cash Grain Farms," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(3), pages 1-15, December.
    3. Pierrick Jan & Markus Lips & Michel Dumondel, 2010. "Technical efficiency of Swiss dairy farms locat-ed in the mountain area considering both eco-nomic and environmental resources," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 3(1), pages 39-76.
    4. Sauer, J. & Walsh, J. & Zilberman, D., 2014. "Agri-Environmental Policy Effects at Producer Level – Identification and Measurement," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 49, March.
    5. Aditya R. Khanal & Ashok K. Mishra, 2014. "Agritourism and off-farm work: survival strategies for small farms," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 65-76, November.
    6. Timo Sipiläinen & Anni Huhtala, 2013. "Opportunity costs of providing crop diversity in organic and conventional farming: would targeted environmental policies make economic sense?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 40(3), pages 441-462, July.
    7. Jean‐Paul Chavas & Salvatore Di Falco, 2012. "On the Role of Risk Versus Economies of Scope in Farm Diversification With an Application to Ethiopian Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(1), pages 25-55, February.
    8. Minviel, Jean Joseph & De Witte, Kristof, 2017. "The influence of public subsidies on farm technical efficiency: A robust conditional nonparametric approach," European Journal of Operational Research, Elsevier, vol. 259(3), pages 1112-1120.
    9. Breustedt, Gunnar & Latacz-Lohmann, Uwe & Tiedemann, Torben, 2011. "Organic or conventional? Optimal dairy farming technology under the EU milk quota system and organic subsidies," Food Policy, Elsevier, vol. 36(2), pages 223-229, April.
    10. Schilling, Brian J. & Attavanich, Witsanu & Jin, Yanhong, 2014. "Does Agritourism Enhance Farm Profitability?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(1), pages 1-28, April.
    11. George Battese & D. Rao & Christopher O'Donnell, 2004. "A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies," Journal of Productivity Analysis, Springer, vol. 21(1), pages 91-103, January.
    12. Lakner, Sebastian, 2009. "Technical efficiency of organic milk-farms in Germany - the role of subsidies and of regional factors," 2009 Conference, August 16-22, 2009, Beijing, China 51301, International Association of Agricultural Economists.
    13. Bernhard Brümmer & Thomas Glauben & Geert Thijssen, 2002. "Decomposition of Productivity Growth Using Distance Functions: The Case of Dairy Farms in Three European Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 628-644.
    14. Ani L. Katchova, 2005. "The Farm Diversification Discount," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 984-994.
    15. Henningsen, Arne & Kumbhakar, Subal C. & Lien, Gudbrand D., 2009. "Econometric Analysis of the Effects of Subsidies on Farm Production in Case of Endogenous Input Quantities," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49728, Agricultural and Applied Economics Association.
    16. Barnes, Andrew P & Hansson, Helena H. & Manevska-Tasevska, Gordana & Shrestha, Shailesh & Thomson, Steven G, 2014. "The Influence of diversification on short-term and long-term viability in the Scottish and Swedish agricultural sector," Working Papers 190937, Scotland's Rural College (formerly Scottish Agricultural College), Land Economy & Environment Research Group.
    17. Mamardashvili, Phatima & Bokusheva, Raushan & Schmid, Dierk, 2014. "Heterogeneous Farm Output and Technical Efficiency Estimates," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 63(01), pages 1-15, March.
    18. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-1248, September.
    19. Kumbhakar, Subal C., 2013. "Specification and estimation of multiple output technologies: A primal approach," European Journal of Operational Research, Elsevier, vol. 231(2), pages 465-473.
    20. Laure Latruffe & Boris E. Bravo-Ureta & Alain Carpentier & Yann Desjeux & Víctor H. Moreira, 2017. "Subsidies and Technical Efficiency in Agriculture: Evidence from European Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(3), pages 783-799.
    21. Barnes, Andrew Peter & Hansson, Helena & Manevska-Tasevska, Gordana & Shrestha, Shailesh & Thomson, Steven, 2014. "The Influence of diversification on short-term and long-term viability in the Scottish and Swedish agricultural sector," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182654, European Association of Agricultural Economists.
    22. Carlos D. Mayen & Joseph V. Balagtas & Corinne E. Alexander, 2010. "Technology Adoption and Technical Efficiency: Organic and Conventional Dairy Farms in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 181-195.
    23. Chaplin, Hannah & Davidova, Sophia & Gorton, Matthew, 2003. "Agricultural Adjustment And The Diversification Of Farm Households In Central Europe," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25843, International Association of Agricultural Economists.
    24. Martin Kapfer & Sigrid Ziesel & Jochen Kantelhardt, 2015. "Modelling Individual Farm Behaviour and Landscape Appearance," Landscape Research, Taylor & Francis Journals, vol. 40(5), pages 530-554, July.
    25. Christopher O’Donnell & D. Rao & George Battese, 2008. "Metafrontier frameworks for the study of firm-level efficiencies and technology ratios," Empirical Economics, Springer, vol. 34(2), pages 231-255, March.
    26. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    27. Mamardashvili, Phatima & Bokusheva, Raushan & Schmid, Dierk, 2014. "Heterogeneous Farm Output and Technical Efficiency Estimates," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 63(1).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luca Romagnoli & Vincenzo Giaccio & Luigi Mastronardi & Maria Bonaventura Forleo, 2021. "Highlighting the Drivers of Italian Diversified Farms Efficiency: A Two-Stage DEA-Panel Tobit Analysis," Sustainability, MDPI, vol. 13(23), pages 1-16, November.
    2. Hai-Dang Nguyen & Thanh Ngo & Tu DQ Le & Huong Ho & Hai T.H. Nguyen, 2019. "The Role of Knowledge in Sustainable Agriculture: Evidence from Rice Farms’ Technical Efficiency in Hanoi, Vietnam," Sustainability, MDPI, vol. 11(9), pages 1-10, April.
    3. Kumar Bhatta & Yasuo Ohe, 2020. "A Review of Quantitative Studies in Agritourism: The Implications for Developing Countries," Tourism and Hospitality, MDPI, vol. 1(1), pages 1-18, October.
    4. Agnieszka Kurdyś-Kujawska & Agnieszka Strzelecka & Danuta Zawadzka, 2021. "The Impact of Crop Diversification on the Economic Efficiency of Small Farms in Poland," Agriculture, MDPI, vol. 11(3), pages 1-21, March.
    5. Beatriz García-Cornejo & José A. Pérez-Méndez & David Roibás & Alan Wall, 2020. "Efficiency and Sustainability in Farm Diversification Initiatives in Northern Spain," Sustainability, MDPI, vol. 12(10), pages 1-18, May.
    6. Laure Latruffe & Andreas Niedermayr & Yann Desjeux & K Herve Dakpo & Kassoum Ayouba & Lena Schaller & Jochen Kantelhardt & Yan Jin & Kevin Kilcline & Mary Ryan & Cathal O’Donoghue, 2023. "Identifying and assessing intensive and extensive technologies in European dairy farming," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(4), pages 1482-1519.
    7. Dono, Gabriele & Buttinelli, Rebecca & Cortignani, Raffaele, 2022. "Financial performance of connected Agribusiness activities in Italian agriculture," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2), July.
    8. Shahzad, Muhammad Abid & Fischer, Christian, 2021. "The State of Other Gainful Activities in European Union-27: An Empirical Analysis of Trends and Determinant Factors," 2021 Conference, August 17-31, 2021, Virtual 315226, International Association of Agricultural Economists.
    9. Cristina Salvioni & Roberto Henke & Francesco Vanni, 2020. "The Impact of Non-Agricultural Diversification on Financial Performance: Evidence from Family Farms in Italy," Sustainability, MDPI, vol. 12(2), pages 1-14, January.
    10. Lajos Baráth & Imre Fertő & Jakub Staniszewski, 2021. "Technological Heterogeneity in Pig Farming: A Metafrontier Approach—Perspectives from Hungary and Poland," Agriculture, MDPI, vol. 11(10), pages 1-13, October.
    11. Siyan Zeng & Fengwu Zhu & Fu Chen & Man Yu & Shaoliang Zhang & Yongjun Yang, 2018. "Assessing the Impacts of Land Consolidation on Agricultural Technical Efficiency of Producers: A Survey from Jiangsu Province, China," Sustainability, MDPI, vol. 10(7), pages 1-17, July.
    12. Muhamad Zahid Muhamad & Mad Nasir Shamsudin & Nitty Hirawaty Kamarulzaman & Nolila Mohd Nawi & Jamaliah Laham, 2022. "Investigating Yield Variability and Technical Efficiency of Smallholders Pineapple Production in Johor," Sustainability, MDPI, vol. 14(22), pages 1-18, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lakner, Sebastian & Kirchweger, Stefan & Hoop, Daniel & Brümmer, Bernhard & Kantelhardt, Jochen, 2015. "Impact of diversification on technical efficiency of organic farming in Switzerland, Austria and Southern Germany," DARE Discussion Papers 1508, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    2. Lakner, Sebastian & Kirchweger, Stefan & Hoop, Daniel & Brümmer, Bernhard & Kantelhardt, Jochen, 2014. "Technical Efficiency of Organic Farming in the Alpine Region – the Impact of Farm Structures and Policies," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182763, European Association of Agricultural Economists.
    3. Lakner, Sebastian & Breustedt, Gunnar, 2015. "Efficiency analysis of organic farming systems- a review of methods, topics, results, and conclusions," 2015 Conference, August 9-14, 2015, Milan, Italy 212025, International Association of Agricultural Economists.
    4. Laure Latruffe & Andreas Niedermayr & Yann Desjeux & K Herve Dakpo & Kassoum Ayouba & Lena Schaller & Jochen Kantelhardt & Yan Jin & Kevin Kilcline & Mary Ryan & Cathal O’Donoghue, 2023. "Identifying and assessing intensive and extensive technologies in European dairy farming," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(4), pages 1482-1519.
    5. Richard Adjei Dwumfour & Eric Fosu Oteng-Abayie & Emmanuel Kwasi Mensah, 2022. "Bank efficiency and the bank lending channel: new evidence," Empirical Economics, Springer, vol. 63(3), pages 1489-1542, September.
    6. Phuc Trong Ho & Pham Xuan Hung & Nguyen Duc Tien, 2023. "Effects of varieties and seasons on cost efficiency in rice farming: A stochastic metafrontier approach," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society, vol. 13(2), pages 120-129.
    7. Nguyen, Hoa-Thi-Minh & Do, Huong & Kompas, Tom, 2021. "Economic efficiency versus social equity: The productivity challenge for rice production in a ‘greying’ rural Vietnam," World Development, Elsevier, vol. 148(C).
    8. Phatima MAMARDASHVILI & Dierk SCHMID, 2013. "Performance of Swiss dairy farms under provision of public goods," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 59(7), pages 300-314.
    9. Dakpo, K Hervé & Desjeux, Yann & Jeanneaux, Philippe & Latruffe, Laure, 2016. "Productivity, efficiency and technological change in French agriculture during 2002-2014: A Färe-Primont index decomposition," 149th Seminar, October 27-28, 2016, Rennes, France 244793, European Association of Agricultural Economists.
    10. Dragan Milić & Tihomir Novaković & Dragana Tekić & Bojan Matkovski & Danilo Đokić & Stanislav Zekić, 2023. "Economic Sustainability of the Milk and Dairy Supply Chain: Evidence from Serbia," Sustainability, MDPI, vol. 15(21), pages 1-21, October.
    11. K Hervé Dakpo & Laure Latruffe & Yann Desjeux & Philippe Jeanneaux, 2022. "Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 422-438, May.
    12. Khafagy, Amr & Vigani, Mauro, 2022. "Technical change and the Common Agricultural Policy," Food Policy, Elsevier, vol. 109(C).
    13. Cillero, Maria Martinez & Breen, James & Thorne, Fiona & Wallace, Michael, 2017. "The effect of the implementation of the 2003 Mid-Term Review of the CAP on technical efficiency of beef production. A comparative analysis," 91st Annual Conference, April 24-26, 2017, Royal Dublin Society, Dublin, Ireland 258617, Agricultural Economics Society.
    14. Gong, Tianchen (Charles) & Battese, George E. & Villano, Renato A., 2019. "Family farms plus cooperatives in China: Technical efficiency in crop production," Journal of Asian Economics, Elsevier, vol. 64(C), pages 1-1.
    15. Khanal, Uttam & Wilson, Clevo & Shankar, Sriram & Hoang, Viet-Ngu & Lee, Boon, 2018. "Farm performance analysis: Technical efficiencies and technology gaps of Nepalese farmers in different agro-ecological regions," Land Use Policy, Elsevier, vol. 76(C), pages 645-653.
    16. K Hervé Dakpo & Yann Desjeux & Philippe Jeanneaux & Laure Latruffe, 2017. "Productivity, technical efficiency and technological change in French agriculture during 2002-2014: A Färe-Primont index decomposition," Working Papers SMART 17-07, INRAE UMR SMART.
    17. Luca Romagnoli & Vincenzo Giaccio & Luigi Mastronardi & Maria Bonaventura Forleo, 2021. "Highlighting the Drivers of Italian Diversified Farms Efficiency: A Two-Stage DEA-Panel Tobit Analysis," Sustainability, MDPI, vol. 13(23), pages 1-16, November.
    18. Roengchai Tansuchat, 2023. "A Copula-Based Meta-Stochastic Frontier Analysis for Comparing Traditional and HDPE Geomembranes Technology in Sea Salt Farming among Farmers in Phetchaburi, Thailand," Agriculture, MDPI, vol. 13(4), pages 1-23, March.
    19. McFadden, Jonathan R., 2017. "Yield Maps, Soil Maps, and Technical Efficiency: Evidence from U.S. Corn Fields," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258120, Agricultural and Applied Economics Association.
    20. Zarkovic, Maja, 2020. "Cap-and-trade and produce at least cost? Investigating firm behaviour in the EU ETS," Working papers 2020/12, Faculty of Business and Economics - University of Basel.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:10:y:2018:i:4:p:1304-:d:142759. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.