Both authors are with the Department of Agricultural Economics, Christian-Albrechts University, Kiel D-24118, Germany. Uwe Latacz-Lohmann is also Adjunct Professor in the School of Agricultural and Resource Economics at the University of Western Australia. E-mail: email@example.com for correspondence. The authors wish to thank the Fielmann AG for financial support as part of the Hof Ritzerau Project. Thanks are also extended to two anonymous referees and the editor for helpful comments and suggestions.
Production Risk and Technical Efficiency in Organic and Conventional Agriculture – The Case of Arable Farms in Germany
Article first published online: 7 SEP 2012
© 2012 The Agricultural Economics Society
Journal of Agricultural Economics
Volume 64, Issue 1, pages 73–96, February 2013
How to Cite
Tiedemann, T. and Latacz-Lohmann, U. (2013), Production Risk and Technical Efficiency in Organic and Conventional Agriculture – The Case of Arable Farms in Germany. Journal of Agricultural Economics, 64: 73–96. doi: 10.1111/j.1477-9552.2012.00364.x
- Issue published online: 24 JAN 2013
- Article first published online: 7 SEP 2012
- (Original submitted September 2011, revision received February 2012, accepted May 2012.)
- Organic versus conventional farming;
- production risk;
- technical efficiency
This paper quantifies the importance of production risk and technical efficiency as two possible sources of production variability in German organic and conventional farming. Determinants of production risk and inefficiency are investigated based on a combination of Just and Pope’s stochastic production framework and a Stochastic Frontier Analysis. The empirical analysis is conducted using a balanced panel of farm records from 1999/2000 to 2006/2007 on 37 organic and conventional arable farms, respectively. Euclidian-Distance-Matching is used to identify for each organic farm a conventional counterpart with similar structural features. Results indicate that output variability in both production technologies is mainly caused by production risk. Land and labour are identified as risk-increasing inputs in both farm types whereas higher capital endowment, seed costs and soil quality have risk-reducing effects.