Efficiency of Egyptian Organic Agriculture: a Local Maximum Likelihood Approach

Productive efficiency analysis is a relevant tool that can be used to evaluate differences in efficiency performance between conventional and organic farms. Such study is important for the assessment of the economic viability of these two agricultural systems. While the existing research has widely used the stochastic frontier methodology and the DEA nonparametric approach to assess farming performance, the use of the local maximum likelihood (LML) approach recently proposed by Kumbhakar et al. (2007) is still at an infant stage. This study represents the first analysis that compares the efficiency levels of organic and conventional farms in Egypt. To do so, we apply LML methods to cross sectional, farm-level data collected from a sample of 60 Egyptian farms. Results suggest that performance of organic farmers is slightly better than performance of their conventional counterparts.