Local selling decisions and the technical efficiency of organic farms

Abstract

The primary purpose of this paper is to examine the factors that influence earned income of organic farmers explicitly incorporating farmer decisions to engage in local selling. The stochastic frontier model identifies role model producers who are the most technically efficient in achieving the maximum output that is feasible with a given set of inputs along with farm and demographic factors that enhance efficiency. Organic earnings equations that control for producer and farm characteristics reveal that organic farmers who are involved in local sales achieve lower earnings. Producer involvement in local sales has little impact on observed technical efficiency on organic farms. © 2010 by the authors.