Abstract
Several studies have focused attention on the differences between organic and conventional farms in terms of efficiency, and controversial findings have resulted from these applications. One source of controversy concerns the assumption about the frontier(s) adopted for the comparison: a common frontier or two separate frontiers for organic and conventional methods? This paper aims to estimate technical efficiency in Italian grape farming. A stochastic frontier analysis (SFA) was applied to a sample of 531 farms (440 conventional and 91 organic farms) collected from the Farm Accountancy Network Database. Among others, a test for evaluating whether a unique or separate frontier was performed. The findings suggest that organic and conventional farms would lie on a common frontier and that organic farms have greater capacity than conventional farms in using their own technical inputs (efficiency amounts to 83.6% and 77.8%, respectively). A number of implications derive from these findings.
Highlights
Organic farming is a well-established reality in Europe, where it has been regulated since 1991
In these cases, the results from the two tests suggest that geographical location and altimetry would not be significant factors in describing the technology, and a common frontier can be adopted in the preferred model
The results suggest that organic and conventional farming systems would lie on a common frontier and that those organic farms seem more careful in using factors of production factors
Summary
Organic farming is a well-established reality in Europe, where it has been regulated since 1991. These studies showed that it is not so evident that organic farms are less profitable and/or less efficient than conventional ones. A study on the coffee sector in Nepal [36] found that organic farms are more efficient than conventional ones in terms of production, inter/shade crops, considering farm size, capital, labour cost, fertiliser and plant protection as inputs. Organic farms in Switzerland, Austria and Southern Germany were analysed by Lakner et al [45] starting from the perspective of diversification and multifunctionality They found that the benefits and drawbacks of diversification by applying a stochastic frontier combined with a metafrontier analysis estimating the effects on both productivity and efficiency
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