Bio-economic modelling of traditional and organic farming systems

Governments in many countries show an increasing concern about food production due to environmental problems and animal and human health problems in the production chain. These problems in the food chain have induced many governments in the world to promote more sustainable farming systems (e.g. organic farming), thereby using instruments such as subsidies and tax provisions. This research aims at developing a model based approach that can be used for assessing current and hypothetical farming systems in economic and environmental terms and calculating the effect of different policies on the choice of the farming system by farmers. Three systems are distinguished, i.e. currrent traditional and current organic farming systems, and hypothetical farming systems based on best agronomic theory. The approach is developed in three stages. In the first stage existing farming systems (traditional and organic) are diagnosed using a distance function approach that is estimated using maximum likelihood and generalised maximum entropy estimation. Next, a set of observations of hypothetical farming systems based on best agronomic theory is generated using agronomic models. Also for the hypothetical farming systems a distance function is estimated and the resulting frontier is compared with the frontier of the existing farming systems. In the third stage, a simulation model is developed that is capable of calculating the effect of different policies on the choice of the farming system.