ORGANIC FARMING IN DENMARK-PRODUCTIVITY, TECHNICAL CHANGE 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 on farm level is analysed by following a time trends as well as a general index model specification. We further try 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 differencies 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. We found evidence 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.Organic Farming, Total Factor Productivity, Market Exit, Agribusiness, Productivity Analysis,

Relational Contracting and Allocation of Decision Rights in the Agri-Food Industry: Producer Contracts and Food Safety

We apply a formal theoretical model of adaptation to two empirical settings within the agri-food industry: specialized pig production and food safety in Denmark. The objective is to allocate decision rights ex ante so that actual decisions taken ex post will optimize the profit accruing to the two parties in a contractual or integrative relation. Two applications are presented in this paper: First an actual partnership between two pork producers in Denmark. Based on detailed budgets we develop detailed schedules for the “reneging temptations” of the two partners- These are the temptations to renege on the contract during the evolution of the partnership. Using a model developed by Baker, Gibbons and Murphy (2006) we calculate equilibria using the Folk theorem in order to determine which is the best allocation of decision rights. We find that the existing allocation of decision rights in the case we examine is efficient in the sense that it results into a second best allocation. Using the same modelling approach we present a second application on salmonella control related to end-feeding, that is, salmonella contamination of pork due to filled bellies of pigs fed for the last 12 hours before delivery. Based on appropriate assumptions, the parties should give the decision right (whether to end-feed or not) to the slaughterhouse in order to reach the firstbest solution which, given the assumptions, is feasibleTheory of the firm, Adaptation theory, Contracts, Decision Rights, Pig production, Food safety, Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Industrial Organization, D21, L2, Q1,

Lack of Credibility in Food Markets - Driving Medium Quality Food Out of the Market

Some food markets are dominated by high quality and standard quality segments, whereas medium quality products are almost absent. A modeling framework with asymmetric information regarding true quality of the products and the resulting lack of consumer confidence is presented. Uncertainty regarding the quality of alleged medium quality products provides certain consumer groups to divert consumptions away from medium quality to either standard or high quality products. These countervailing incentives explain the missing medium quality products. Empirical examples are given to motivate the model

ORGANIC FARMING IN DENMARK-PRODUCTIVITY, TECHNICAL CHANGE 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 on farm level is analysed by following a time trends as well as a general index model specification. We further try 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 differencies 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. We found evidence 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

Breathtaking or Stagnating? - Productivity, Technical Change and Structural Dynamics in Danish Organic Farming

This paper attempts to quantitatively measure the change in the productivity of Danish organic farming in recent years by using panel data on 56 organic farms mainly engaged in milk production for the period 2002 to 2004. Based on a translog production frontier framework the technical and scale efficiency on farm level is analyzed by considering also curvature consistency. The total change in productivity for the reference period is measured by using the Malmquist total factor productivity index approach based on a time trends as well as a general index model specification. Input specific bias in technical change as well as a general index model specification. Input specific bias in technical change as well elasticities of input substitution are analyzed. Factors for the development of technical change and the change in efficiency over time are investigated by applying a bootstrapped ITSUR techniques. Finally we try to conclude on 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 difference in the organic farms' technical efficiency, no significant total factor productivity growth and even a slightly negative rate of technical change in the period investigated. We found evidence 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. Finally the general index mode specification was found to deliver a more accurate mapping of total factor productivity growth

Relational Contracting and Allocation of Decision Rights in the Agri-Food Industry: Producer Contracts and Food Safety

We apply a formal theoretical model of adaptation to two empirical settings within the agri-food industry: specialized pig production and food safety in Denmark. The objective is to allocate decision rights ex ante so that actual decisions taken ex post will optimize the profit accruing to the two parties in a contractual or integrative relation. Two applications are presented in this paper: First an actual partnership between two pork producers in Denmark. Based on detailed budgets we develop detailed schedules for the “reneging temptations” of the two partners- These are the temptations to renege on the contract during the evolution of the partnership. Using a model developed by Baker, Gibbons and Murphy (2006) we calculate equilibria using the Folk theorem in order to determine which is the best allocation of decision rights. We find that the existing allocation of decision rights in the case we examine is efficient in the sense that it results into a second best allocation. Using the same modelling approach we present a second application on salmonella control related to end-feeding, that is, salmonella contamination of pork due to filled bellies of pigs fed for the last 12 hours before delivery. Based on appropriate assumptions, the parties should give the decision right (whether to end-feed or not) to the slaughterhouse in order to reach the firstbest solution which, given the assumptions, is feasibl

Breathtaking or Stagnating? - Productivity, Technical Change and Structural Dynamics in Danish Organic Farming

This paper attempts to quantitatively measure the change in the productivity of Danish organic farming in recent years by using panel data on 56 organic farms mainly engaged in milk production for the period 2002 to 2004. Based on a translog production frontier framework the technical and scale efficiency on farm level is analyzed by considering also curvature consistency. The total change in productivity for the reference period is measured by using the Malmquist total factor productivity index approach based on a time trends as well as a general index model specification. Input specific bias in technical change as well as a general index model specification. Input specific bias in technical change as well elasticities of input substitution are analyzed. Factors for the development of technical change and the change in efficiency over time are investigated by applying a bootstrapped ITSUR techniques. Finally we try to conclude on 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 difference in the organic farms' technical efficiency, no significant total factor productivity growth and even a slightly negative rate of technical change in the period investigated. We found evidence 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. Finally the general index mode specification was found to deliver a more accurate mapping of total factor productivity growth.Land Economics/Use,

Securing Food Quality in the Danish Broiler Supply Chain - an Economic and Organizational Study

Using the Danish broiler sector and an ongoing food quality project as a case study, the paper provides a dicussion of how new food safety and food quality standards might be implemented. In the paper the design of new payment schemes is seen as an important part of the realignment of the poultry supply chain. The basic principles of such a new scheme is outlined and suggestions for a redesign of the incentive structures are discussed. Furthermore economic and organizational issues, related to the structural realignment of the supply chain raised by the development and implementation of a chain-wide HACCP system, are discussed. It is concluded that successfully implementation of HACCP principles in a sector as a whole, not only is a matter of describing procedures and formulation of sanitary and safety requirements