Research Papers

Technical efficiency of organic pasture farming in Germany: The role of location economics and of specific knowledge

S. Lakner^a1 c1, S. von Cramon-Taubadel^a1 and B. Brümmer^a1

^a1 Department of Agricultural Economics and Rural Development, Georg-August University Göttingen, Platz der Göttinger Sieben 5, D-37073 Göttingen, Germany.

Abstract

We analyze the efficiency of organic pasture farming in Germany using data from 1994/95 to 2005/06. Five inputs and one output are analyzed by means of a stochastic frontier production function, allowing for heteroscedasticity and technical effects. Five sets of possible determinants of technical efficiency are considered in the model. These include: (1) farm structure and resources; (2) human capital and management capacities; (3) institutional choice; and (4) subsidies. To these factors that are commonly included in technical effects models, we add (5) a set of variables that capture localization and urbanization economies such as the share of organic farms in a region and the regional share of votes for the Green Party in recent elections. These regional effects are found to have a significant impact on the technical efficiency of organic farms. The evolution of efficiency on farms that are converting from conventional to organic farming is also analyzed.

(Accepted June 19 2011)

Key Words:

• efficiency analysis;
• organic farming;
• location economics;
• specific knowledge

Correspondence:

^c1 Corresponding author: slakner@gwdg.de