Farm performance and input self-sufficiency increases with functional crop diversity on Swedish farms

Diversified crop production is a key agroecological practice that enhances ecosystem functions and reduces reliance on costly external inputs, such as for plant protection and nutrition but might also increase labour costs and lower crop yields. We investigate if functional diversification, i.e., cultivation of crop species with contrasting ecological functions, is associated with a higher growth in farm economic performance and input selfsufficiency. This is compared with increased related crop diversity i.e., the cultivation of genetically closely related crop species. We apply the system GMM dynamic panel data estimator to 35,195 medium and large Swedish farms (2001-2018), combining information on crop grown on each field and year with farm financial and individual characteristics. We find growth in farm economic performance and input self-sufficiency to respond positively to functional crop diversification and negatively to related crop diversification. The results highlight that a decomposed assessment of crop diversification provides an enhanced understanding of the buildup of resource-use efficiencies and production- and market risk reductions on Swedish farms.