Adoption of organic farming practices: a theoretical and empirical analysis

In this paper a theoretical model to analyse and explain the adoption of organic farming techniques at a regional level is presented. Farmers goals and goals structures are used in a means-end analysis of the producer’s behaviour, leading to a representation of the farmer’s decision making process which is more general than the simple neoclassical model of the firm. The relationships among farmer’s motivations and institutional factors acting as incentives and barriers are explicitly taken into account in the analysis, which embeds historical factors as part of the explanation of the process of adoption. As a result, organic farming can be viewed as an institutional adaptation to the absence of certain public goods markets, such as those of clean water, healthy soil, hazard-free food, etc. Organic farming clearly perform a role in internalising the externalities in agricultural production; in this sense it serves as an incentive device. At the same time it also operates as a self-selection device, to identify the characteristics of different individuals. Individuals who believe that they can play a positive role in protecting the environment or, more in general, in shaping the society by their own work, will be more willing to convert to organic farming. An empirical application of the model is used to analyse the adoption process in a paradigmatic Italian region.