Does ecologization matter for technical efficiency in crop production? A case of Swedish agriculture

The effect of ecologisation on crop production performance in Sweden, measured as technical efficiency, was investigated by incorporating ecologisation into the production function and technical inefficiency determinant model. An unbalanced panel of data from the Swedish Farm Accounting Data Network (FADN), comprising 1944 observations on 346 crop farms 2009-2019, was used in stochastic frontier analysis. Ecologisation indicators considered were crop diversity index, organic farming, and environmental subsidies. The results showed that ecologisation affected the technical efficiency of crop production. Crop diversity index for the current year and the two preceding years had a positive effect on performance, with crop diversity index for current year in particular being positively associated with production performance of crop production. Organic farming was estimated to be negatively significantly associated with production performance. Rural subsidies were positively associated with production performance, but no association was found between environmental subsidies and production performance. Mean technical efficiency was 0.715, with higher values in southern Sweden than northern Sweden. These findings on the impact of ecologisation on arable farming can be useful when designing policies to encourage farmers to adopt ecologisation approaches.