The Impacts Of Organic Certification On Dairy Farm Performance In Europe - A Latent Class Counterfactual Analysis

Summary

Based on a large dataset of European dairy farms and systematic counterfactual analysis, the present study aims at quantifying the economic impacts of organic certification. Gross margins and efficiency are used as key outcome variables in the analysis. Four distinct classes regroup farms which are more similar in terms of their technological choice. These are not determined a priori, but are defined through a statistical class splitting model. For the estimation of treatment effects, an endogenous treatment model is consequently used. Results suggest that organic certification makes economic sense for dairy farmers in Europe. On the basis of this model, certification effects across classes range between 38% and more than 140% in terms of profitability gains, and 0% and 5% in terms of efficiency gains.