Organic farming in Scandinavia - Productivity and market exit

This paper attempts to quantitatively measure the change in the productivity of Danish organic farming in recent years. Based on a translog production frontier framework the technical and scale efficiency at farm level is analysed by following a time trends as well as a general index model specification. Further this study tries to analyse the significance of subsidies for promoting long term growth in organic production by estimating a bootstrapped bivariate probit model with respect to factors influencing the probability of organic market exit. The results revealed significant differences in the organic farms' technical efficiencies, no significant total factor productivity growth and even a slightly negative rate of technical change in the period investigated. Evidence has been found for a positive relationship between subsidy payments and an increase in farm efficiency, technology improvements and a decreasing probability of organic market exit which was also confirmed for off farm income.