Technical Efficiency in Organic and Conventional Farming: Evidence form Italian Cereal Farms

Fabio A. Madau

Abstract

A stochastic frontier production model was applied to estimate technical efficiency in a sample of Italian organic and conventional cereal farms. The main purpose was to assess which production technique revealed higher efficiency. Statistical tests on the common production function model suggested that the two cultivation methods might lie on different frontiers. Separate analyses of two sub-samples (93 and 138 observations for organic and conventional farms, respectively) found that conventional farms were significantly more efficient than organic farms, with respect to their specific technology (0.902 vs. 0.831). Analysis also estimated that efficiency plays a crucial role into the factors affecting productivity in the organic process. Some policy implications can be drawn from these findings.