Does organic certification make economic sense for dairy farmers in Europe?–A latent class counterfactual analysis

Abstract

Certification in agriculture ensures compliance with tangible standards and should generate economic opportunities for farmers. This study quantifies the variable profit and efficiency impacts of organic certification in dairy farming across Europe, using farm‐level FADN data from 25 countries while accounting for heterogeneity through a class splitting model. Four distinct classes with dairy farm enterprises operating under similar production conditions were identified in order to assess gross margin and efficiency differences among certified and non‐certified farms. Depending on the nature of the selection bias, treatment effects were estimated either through an endogenous treatment model or through entropy balancing. The results suggest that organic certification increases gross margins for dairy farm enterprises in Europe, 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 to 66 Euros per cow to 234 euros per cow. In relative terms, this implies gains between 38% and 50% for farms classified into more cool or temperate zones and a gain of up to 182% for the farms assigned to the class that designates warmer climatic conditions.

Agroecology for a Sustainable Agriculture and Food System: From Local Solutions to Large-Scale Adoption

“…Farms need to maintain economic viability to ensure long-term survival (Finger & El Benni 2021). Grovermann et al (2021Grovermann et al ( , p. 1001 Farms adopt agroecological practices (see Section 2) if the change in expected utility induced by this adoption compared to current conventional farming practices is positive (Mohring & Finger 2022). One key element is the expected change in profitability.…”

“…D'Annolfo et al ( 2017) also show that adoption of agroecological practices resulted in higher profits in two-thirds (N = 73) of the reviewed studies with global coverage. Grovermann et al (2021) study the economic viability of organic dairy farming across 25 European countries using farm accountancy data from 41,903 dairy farm enterprise observations. They found that organic production is associated with higher gross margins for dairy farms (in the range of €66-…”

Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France

“…(2015), Sauer and Paul (2013), and Grovermann et al. (2021). In general, farms are separated into classes depending on the degree of intensification of their practices, based, for example, on livestock density.…”

“…In agriculture, latent class modeling has been used by Alvarez and Arias (2015), Alvarez and del Corral (2010), Alvarez et al (2012), Cillero et al (2019), Kellermann and Salhofer (2014), Orea et al (2015), Sauer and Paul (2013), and Grovermann et al (2021). In general, farms are separated into classes depending on the degree of intensification of their practices, based, for example, on livestock density.…”

How does platform certification affect the marketing performance of sellers in food e-commerce? Interaction with reputation mechanisms

“…The primary contributions of this research are as follows: on the outset, this research investigates the market effects of food e-commerce platform certification. Current research has focused on certification mechanisms in the traditional market (Grovermann et al ., 2021; Zhou et al ., 2022), while little attention has been paid to certification mechanisms in the e-commerce market. Due to the unique operation rules and audit rules, the market effect of the certification mechanism in the e-commerce market may differ from those in the traditional markets, which makes the previous research findings unapplicable to the research on certification mechanisms in the e-commerce market.…”