What is my optimal technology? A metafrontier approach using Data Envelopment Analysis for the choice between conventional and organic farming

We analyse the relative competitiveness between organic and conventional farming under different policy scenarios using a DEA-based non-convex metafrontier model. This model allows us to identify a farm’s ex post optimal technology based on input-output observations. Results for Bavarian dairy farms indicate that more than two-thirds of the farms in both technologies – organic and conventional – have chosen their optimal farming system. The remaining farmers could increase their productivity by roughly 5% on average by switching to the other technology. Assuming away the existence of the EU milk quota, reduces the number of sample farms for which organic farming is the optimal technology by more than three fourth. This finding suggests that ceteris paribus organic dairy farms may lose competitive advantage with the abolition of the EU’s milk quota regime in 2015.