Crop diversity, organic farming, and agricultural productivity: Evidence from European regions

This paper examines the relationship between crop diversity, organic farming, and
agricultural efficiency across European regions using data from the Farm Accountancy
Data Network (FADN). Technical efficiency is measured via a conditional
Debreu-Farrell input-oriented index within a Data Envelopment Analysis (DEA)
framework, based on labor, capital, and land inputs. Efficiency scores are analyzed
using panel data models with correlated random effects to distinguish within- and
between-region variation. We find a statistically significant positive effect of organic
farming on efficiency within regions but not across regions, suggesting that local
adoption improves productivity even if regional averages do not. In contrast, crop
diversity is linked to lower efficiency within regions – a counterintuitive result that
possibly reflects adaptation to external shocks rather than productivity aims. Taking
into account the strong spatial dependence, we apply spatial panel models to
a balanced subsample, confirming the robustness of our results. Climate variables
further inform the analysis: temperature variability reduces efficiency, while higher
average temperatures support it. The negative association between crop diversity
and efficiency highlights the dual role of diversification as a resilience strategy and
a possible productivity trade-off, which deserves further research.

Keywords: agricultural efficiency, climate impacts, crop diversity, organic farming, spatial panel data

Li, C-Z and G. Engström.. 2025. Beijer Discussion Paper 282: Crop diversity, organic farming, and agricultural productivity: Evidence from European regions. Beijer Discussion Paper Series.