For the research, farm-level FADN* data from 25 countries were used. Diversity of farms was accounted for by defining different production environments. Four distinct classes with dairy farm enterprises operating under similar production conditions were identified in order to assess variable profit and efficiency differences among certified and non-certified farms.
Selection bias occurs as farmers decide themselves to obtain certification rather than random assignment. To address this bias, the FiBL researchers estimated certification impacts using a model that accounts for characteristics that can be easily observed (e. g. farm size) as well as characteristics that are more difficult to be observed (e. g. risk aversion).
The results suggest that organic certification for dairy farm enterprises in Europe had a positive impact on variable profit while slightly increasing technical efficiency in two out of four classes. These significant effects of certification on efficiency were estimated at 2 % and 7 %, respectively. As regards variable profit, effects range from 66 euros per cow to 234 euros per cow. In relative terms, this implies gains between 38 % and 50 % for farms in more cool or temperate zones and a gain of up to 182 % for farms in zones of warmer climatic conditions.
*FADN is the European Union’s farm accountancy data network
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Links
- onlinelibrary.wiley.com: Paper "Does organic certification make economic sense for dairy farmers in Europe? – A latent class counterfactual analysis"
- europa.eu: Farm accountancy data network