Economic effects of plot sizes and farm-plot distances in organic and conventional farming systems: A farm-level analysis for Germany

Plot sizes and farm-plot distances affect the economic performance of agricultural production. Their economic effects likely differ between conventional and organic farming systems due to major differences in crop production programs. Our paper quantifies these effects based on big data on resource requirements of field operations, summarized by regression models. Combined with detailed case study information obtained through interviews, we assess plot size and farm-plot distance effects for three case study farms which recently converted to organic farming. Our results show for both farming systems, as expected, that larger plot sizes reduce labor requirements and costs associated with crop production while larger farm-plot distances increase them. At same plot sizes and farm-plot distances organic farms face lower costs in crop production and, at given market prices, higher profits. Cost savings from larger plot sizes are, however, higher in conventional farming systems as are cost increases from growing farm-plot distances. This implies that economic benefits of conversion are higher for farms managing smaller plots farther away from the farm. Land fragmentation might hence favor switching to organic production and motivate regionally differentiated subsidy rates.