Presentation at the Vadym Hetman Kyiv National economic University

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

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

November 11, 2011 Efficiency of organic farms - Lakner & von Cramon-Taubadel Slide No.: 2

1. Introduction: Organic Associations and the state


Farmers Associations for organic farming

Government-Signs for organic farming

Germany European Union

1. Introduction: Wheat prices

- €

100.00 €

200.00 €

300.00 €

400.00 €

500.00 €

600.00 €

Soft Wheat conventional

Soft Wheat Organic


Figure 2: Producer Prices of Conv. and Organic Soft WheatSources: ZMP [a]; ZMP [b]; ZMP [c]; AMI (2010a, 2010b, 2011a, 2011b).

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

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

Slide No.: 6

2. Methods: Stochastic Frontier Analysis


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

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


Figure 9: Technical efficiency in 15 regional cluster of organic farmingSource: own calculations

November 11, 2011 Slide No.: 9

3.2 Comparative studies

• Organic farming is less productive, • Mixed evidence with efficiency• Often separate estimation in DEA• The choice of farm-system?


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


Environmental objectives of organic farming


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

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


Thank you for your attention!

GEORG-AUGUST UNIVERSITÄT GÖTTINGEN

1920s – 1930s

1. Introduction: History of organic farming


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

Retailing in the organic market


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.

Farm-sizes in of German Farms



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

The organic market worldwide• The world of organic farming in 2007: share of land


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%


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

technology

2. Methods: Efficiency Analysis

Figure 6: Production function and production frontierSource: Cantner et al. 2007: p.5

November 11, 2011


Production-“frontier“„Best practice“

Production function„actual practice“

B

C„Optimal practice“

Output

Input

Slide No.: 21

Used model approaches


0

1

2

3

4

5

6

7

8

98

5

1 1 1

Number of papers

Number of papers

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


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

Presentation at the Vadym Hetman Kyiv National economic University

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