Technical efficiency of organic milk-farms in Germany { the role of subsidies and of regional factors

Abstract

This paper investigates the efficiency of organic milk farms in Germany based on data from 1994/95 to 2005/06. Five inputs and one output are analysed by means of a stochastic frontier production function, allowing for heteroscedasticity and technical effects. The selection of determinants of technical efficiency includes 5 groups of indicators. The analysis is focused on the impacts of farm support of organic farms and of regional factors, which can influence technical efficiency. The results show, that the agri-environmental payments do not affect efficiency. Farms, which receive investment aid, show lower efficiency scores. Finally, the implications for the agricultural policy are discussed.