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What is my optimal technology? A metafrontier approach using Data Envelopment Analysis for the choice between conventional and organic farming

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  • Breustedt, Gunnar
  • Tiedemann, Torben
  • Latacz-Lohmann, Uwe

Abstract

We analyse the relative competitiveness between organic and conventional farming under different policy scenarios using a DEA-based non-convex metafrontier model. This model allows us to identify a farm’s ex post optimal technology based on input-output observations. Results for Bavarian dairy farms indicate that more than two-thirds of the farms in both technologies – organic and conventional – have chosen their optimal farming system. The remaining farmers could increase their productivity by roughly 5% on average by switching to the other technology. Assuming away the existence of the EU milk quota, reduces the number of sample farms for which organic farming is the optimal technology by more than three fourth. This finding suggests that ceteris paribus organic dairy farms may lose competitive advantage with the abolition of the EU’s milk quota regime in 2015.

Suggested Citation

  • Breustedt, Gunnar & Tiedemann, Torben & Latacz-Lohmann, Uwe, 2009. "What is my optimal technology? A metafrontier approach using Data Envelopment Analysis for the choice between conventional and organic farming," 2009 Conference, August 16-22, 2009, Beijing, China 51754, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae09:51754
    DOI: 10.22004/ag.econ.51754
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    References listed on IDEAS

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    1. 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.
    2. George E. Battese & D. S. Prasada Rao, 2002. "Technology Gap, Efficiency, and a Stochastic Metafrontier Function," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 87-93, August.
    3. 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.
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    Cited by:

    1. Djokoto, Justice G., 2015. "Technical efficiency of organic agriculture: a quantitative review," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 117(2), pages 1-11, August.

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