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EFFICIENCY ANALYSIS OF ORGANIC FARMING SYSTEMSAN OVERVIEW ON JOINT TOPICS, RESULTS AND CONCLUSIONS
Presentation at the
Vadym Hetman Kyiv National economic University
Sebastian Lakner & Stephan von Cramon-TaubadelNovember 11, 2011
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Outline
1. Introduction: Organic Farming in Germany
2. Methods
3. Overview on empirical results3.1 Studies focussing on organic farming
3.2 Comparative studies
3.3 Joint topics and results, shortcomings
4. Summary and Conclusions
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1. Introduction: Organic Associations and the state
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Farmers Associations for organic farming
Government-Signs for organic farming
Germany European Union
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1. Introduction: Wheat prices
- €
100.00 €
200.00 €
300.00 €
400.00 €
500.00 €
600.00 €
Soft Wheat conventional
Soft Wheat Organic
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Figure 2: Producer Prices of Conv. and Organic Soft WheatSources: ZMP [a]; ZMP [b]; ZMP [c]; AMI (2010a, 2010b, 2011a, 2011b).
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Efficiency of organic farms - Lakner & von Cramon-Taubadel
1. Introduction: Grain Yields (dt/ha)
19861987
19881989
19901991
19921993
19941995
19961997
19981999
20002001
2002
20032004
20052006
2007
20082009
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Yield organic Wheat (dt/ha) Moving average (Yield organic Wheat (dt/ha))
Yield conv. Wheat (dt/ha) Moving average (Yield conv. Wheat (dt/ha))
November 11, 2011 Slide No.: 5
Figure 5: Wheat-Yields in Organic and Conv. Farms in GermanySource: own calculation, data from the Federal Ministry of Food, Agriculture and Consumer Protection
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B
technology
2. Methods: Data Envelopement Analysis
November 11, 2011 Efficiency of organic farms - Lakner & von Cramon-Taubadel
Figure 7: Production function and production frontierSource: Cantner et al. 2007: p.5
C
Output
Input
Output-orientedInput-
oriented
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2. Methods: Stochastic Frontier Analysis
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Stochastic Production Frontiery = f (x; beta) * exp{v-u}
Stochastic-term: exp {v}
maximal feasible output
Inefficiency-term: exp{- u}
Input
Observed farm n
Output
Figure 8: The Stochastic and inefficiency term in the modelSource: Own elaboration according to COELLI et al. 2005: p. 244
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3.1 Studies focussing on organic farming
• Labour’s impact on organic farms
• Arable farms > mixed farms > grassland farms
• The scale level is not always optimal
• Optimal specialization
• Regional distribution
• Efficiency during the period of conversion
• The organic subsidy has a negative impact on efficiency
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Figure 9: Technical efficiency in 15 regional cluster of organic farmingSource: own calculations
November 11, 2011 Slide No.: 9
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3.2 Comparative studies
• Organic farming is less productive, • Mixed evidence with efficiency• Often separate estimation in DEA• The choice of farm-system?
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3.3 Joint topics and results, shortcomings
• Environmental objectives of organic farming• Farm-structure of organic vs. conventional
- Sample-selection techniques (the Heckman model)
- Matching techniques
• Balance of observation in the data-set• Optimal level of specialization• Methodological issues
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Environmental objectives of organic farming
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0.40 0.45 0.50 0.55 0.60 0.65 0.70 0.75 0.800.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
0.80
0.85
Organic farming
Reduced extensi-fication of grass-land use
Enlarged extensi-fication of grass-land use
Diversification of arable land use
No Participation
Environmental Efficiency
Var
iabl
e re
turn
s to
scal
e E
ffici
ency
Figure 12: Technical and Environmental Efficiency in BavariaSource: own elaboration based on the results of Kantelhardt et al. 2009
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4. Summary and Conclusions
• Organic farming is less productive• Mixed evidence with efficiency• Sampling issues
- Balance in the sample- Structural issues
• Little discussion on topics specific to organic- Conversion to organic farming- Environmental efficiency- Little data on economic and environmental variables
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Thank you for your attention!
GEORG-AUGUST UNIVERSITÄT GÖTTINGEN
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1920s – 1930s
1. Introduction: History of organic farming
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1990s – 2000s
1980s
‚Natural farming‘
Ecological Farming
AGÖL, BÖLW
East-Germany ?
Gäa Bioland, Naturland EU-Bio
1950s - 1970s
‘Organic-biological farming’
Müller & Rusch
‚biological farming‘
Source: own elaboration, see also Vogt 2000, p.19
‘Bio-dynamic farming’
Demeter
Rudolf Steiner 1924
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Retailing in the organic market
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1997 2000 2001 2002 2003 2004 2005 2006 2007 2008 20090%
10%20%30%40%50%60%70%80%90%
100%
7 5 4 6 6 7 8 7 6 6 7
28 33 35 35 35 3741
49 53 57 56
31 28 27 26 26 2625
23 2222 22
10 10 9 9 8 86
5 43 3
5 7 7 7 7 7 65 5 4 419 17 17 17 17 16 14 11 10 8 7
Producer direct-marketing1 Bakery, Butcher's ShopHealth Food Shop (Reformhäuser) Organic Food StoresSupermarkets & Discounter2 Others3
Figure 10: Shares of sales channels in the German market for organic foodSource: Authors’ elaboration, data from IÖW (2007), RIPPIN and HAMM (2007), AMI (2011)1: Farmers on weekly markets and farm-shops; including delivery-services from farmers. 2: Including Special Fruit and Vegetable stores.3: Including drugstores, petrol-stations and other delivery services.
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Farm-sizes in of German Farms
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November 11, 2011 Efficiency of organic farms - Lakner & von Cramon-Taubadel
Figure 4: Regional concentration of organic farms in Germany in 2007Source: Regional Database 2007 and 2005 from the German Federal Statistical Office (DESTATIS 2006)
18
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The organic market worldwide• The world of organic farming in 2007: share of land
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Table 1: Premium for organic grassland-farming in Germany Status August 2009 Programm ländl. Entwicklung ELER-Verordnung
VO (EG) Nr. 1257/1999 (VO (EG) Nr. 1698/2005) Umstellung Beibehaltung Umstellung Beibehaltung Differenz
Berlin 153 € 102 € 131 € 128% Brandenburg 180 € / 130 € 130 € 131 € 101% Baden-Württemberg 130 € 130 € 150 € 115% Bayern 255 € 255 € 190 € 190 € 75% Bremen 285 € / 160 € 160 € 137 € 86% Hessen 190 € 190 € 160 € 84% Hamburg 153 € 160 € 137 € 86% Mc-Pomm 210 € 160 € 135 € 84% Niedersachsen 285 € / 160 € 160 € 137 € 86% Nordrhein-Westfalen 409 € / 204 € 153 € 262 € 137 € 90% Rheinland-Pfalz 205 € / 153 € 120 € 120 € 100% Schleswig-Holstein 285 € / 160 € 160 € 137 € 86% Saarland 210 € 160 € 262 € 116 € 73% Sachsen 244 € 244 € 262 € 137 € 56% Sachsen-Anhalt 252 € 192 € 252 € 192 € 100% Thüringen 230 € 205 € 187 € 160 € 78% Germany 210 € 160 € 262 € 137 € 86%
November 11, 2011 Efficiency of organic farms - Lakner & von Cramon-Taubadel
150 € 94%
300 € 210 € 82 %
Que
lle: E
igen
e R
eche
rche
, Nie
berg
& K
uhne
rt 20
06
270 € 170 € 106 %
324 € 14204 € 84%
Slide No .20
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technology
2. Methods: Efficiency Analysis
Figure 6: Production function and production frontierSource: Cantner et al. 2007: p.5
November 11, 2011
Efficiency of organic farms - Lakner & von Cramon-Taubadel
Production-“frontier“„Best practice“
Production function„actual practice“
B
C„Optimal practice“
Output
Input
Slide No.: 21
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Used model approaches
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0
1
2
3
4
5
6
7
8
98
5
1 1 1
Number of papers
Number of papers
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November 11, 2011 Efficiency of organic farms - Lakner & von Cramon-Taubadel Folie Nr. 23 von 30
Figure 10: Technical efficiency of organic farms during and after the conversion periodSource: own calculations
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Efficiency of organic farms - Lakner & von Cramon-Taubadel
Figure 5: Milk-Yields in Organic and Conventional Farms in GermanySource: own calculation, data from the Federal Ministry of Food, Agriculture and Consumer Protection
1. Introduction: Milk-Yields on organic farms
November 11, 2011 Slide No .24