Comparing the Profitability of Organic and Conventional Production in Family Farming: Empirical Evidence From Brazil

Several studies have compared the profitability of organic and conventional producers, but present very conflicting results. Although in the majority of these papers selection bias due to observables is accounted for, the possibility of selection based on unobservables has been largely overlooked. In this paper, we compare these two types of producers using a large and unique data of about 4.2 million family farmers in Brazil. Standard propensity score matching techniques are used together with the procedure recently developed by Oster (forthcoming) to address concerns about omitted variables. Our results confirm the working hypothesis that organic producer's profits are lower than conventional ones.