Effect of adoption of organic farming on technical efficiency of olive-growing farms: empirical evidence from West Bank of Palestine

Abstract

Organic farming is one of the methods that increases the value added of agricultural products in a sustainable way. This paper examines how the adoption of organic farming has impacted the technical efficiency of Palestinian olive-growing farms in the West Bank. Using cross-sectional data of olive farms in the Jenin governorate, we employ an input-oriented data envelopment analysis framework to compute radial and input use efficiencies. Considering heterogeneity in technology between organic and conventional farming, a metafrontier with a directional distance function approach was applied. As self-selection bias may exist due to the decision to adopt organic farming, we apply the endogenous switching regression method to reduce bias caused by unobserved heterogeneity. Results suggest that organic farms in Jenin are not less efficient than conventional farms. Their organic farming method improves input use efficiency with respect to labor and cost relative to conventional farming. While organic farming is commonly considered to be less efficient and more costly, our findings from Jenin imply that it is, in fact, a more efficient method. We suggest that promoting organic olive farming could offer an effective strategy for small farms to add value, despite the severe geopolitical constraints of farming in the West Bank.