The efficiency of Spanish arable crop organic farms, a local maximum likelihood approach

The methodologies that have been used in existing research to assess the efficiency with which organic farms are operating are generally based either on the stochastic frontier methodology or on a deterministic non-parametric approach. Recently, Kumbhakar et al. (J Econom 137:1-27, 2007) proposed a new nonparametric, stochastic method based on the local maximum likelihood principle. We use this methodology to compare the efficiency ratings of organic and conventional arable crop farms in the Spanish region of Andalucia. Nonparametrically encompassing the stochastic frontier model is especially useful when comparing the performance of two groups that are likely to be characterized by different production technologies.