Several studies have focused attention on the differences between organic and conventional farms in terms of efficiency, and controversial findings have resulted from these applications. One source of controversy concerns the assumption about the frontier(s) adopted for the comparison: a common frontier or two separate frontiers for organic and conventional methods? This paper aims to estimate technical efficiency in Italian grape farming. A stochastic frontier analysis (SFA) was applied to a sample of 531 farms (440 conventional and 91 organic farms) collected from the Farm Accountancy Network Database. Among others, a test for evaluating whether a unique or separate frontier was performed. The findings suggest that organic and conventional farms would lie on a common frontier and that organic farms have greater capacity than conventional farms in using their own technical inputs (efficiency amounts to 83.6% and 77.8%, respectively). A number of implications derive from these findings.
Although in recent years some credit institutions have shown a willingness to support agricultural entrepreneurs, there is still a lack of private financing or co-financing in the agricultural sector. Many farms, in fact, are not able to meet the indicators or to provide the fees required by banks to obtain investment loans. The financial instruments introduced by the European Commission within the Rural Development Programme aim at supporting access to credit for farms to make them more economically viable, competitive, and suited to market requirements. The objective of this paper is to analyze the role played by the financial instruments introduced by the European Union to support and encourage the improvement of farms and, in general, the agriculture, forestry, human capital, and rural development in Italy. The paper explores the topic in detail by presenting a case study of a region that has successfully applied these instruments using a revolving fund with a special background. The quantitative data used in this study are administrative; some information was obtained through a survey. Regional information on the implementation of this fund is examined in terms of both opportunities and limitations to highlight the best practice. The findings suggest that certain conditions are required to develop and implement effective financial instruments: a real and effective collaboration between regional administration, banking institutions, and farms that are willing to grasp the newness; a reasonable period of time (some years); know-how because knowledge and experience are crucial, together with the ability to face complexity both in terms of normative issues and financial engineering instruments themselves. Several implications derive from these findings.
This paper aims to highlight the potential of a FADN additional survey when payment for organic farming is to be calculated in the rural development decision-making process. In fact, the number of organic farms included in the FADN is often too low to provide consistent results. The analysis is based on a direct survey conducted on a larger number of farms than those included in the FADN continuous sample, considering the organic grape-growing farms. The estimate of the appropriate support payments (amount per hectare) is based on the gross margin methodology which allows additional costs and income foregone at micro-level to be highlighted. The method uses the partial balance sheet of a single crop processing to compare costs and revenues of organic and conventional grape-growing farms and considering both certification and transaction costs.
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