Technical efficiency and its determinants in the European Union

Abstract

The study concerns the measurement of the technical efficiency of agriculture in the 27 European Union (EU) countries in 2010. The studies were conducted based on the result-oriented DEA method assuming variable advantages of scale. Moreover, in the study, the factors affecting technical efficiency were identified, and the econometric modelling of their impact was performed with the use of the Tobit model. The studies indicate that across the 27 EU Member States, the level of the technical efficiency of agriculture is diverse, and the difference between the states with the highest and the lowest efficiencies is 40%. Cyprus, Denmark, Greece, France, Spain, the Netherlands, Luxembourg, Italy and Malta were identified as the countries with the thoroughly technically efficient agriculture. In turn, the least technically efficient agriculture is observed for the Czech Republic, Lithuania, Hungary, Ireland, Latvia and Slovakia. Taking into account the factors determining the technical agriculture efficiency, it should be noted that the stimulants have proven to be such factors as: the soil quality, the age of the head of the household and the surcharges for investments. In turn, the size of the farm appeared to be irrelevant from the viewpoint of the technical efficiency of the agricultural sector.

Medium Term Analysis of Technical and Allocative Efficiency in Romanian Farms Using FADN Dataset

“…Comparing outcomes of technical efficiency to previous researches using a constant return to scale (CRS) input based approach, it emerges an increase of technical efficiency which in average value shifted from 74.7%, as assessed by Nowak et al in 2015, to …”

“…Furthermore, financial subsidies disbursed by the second pillar of the CAP have allowed besides a generational turnover of farmers, an implementation of training activities and a diffusion of technical assistance programs (Tudor and Alexandri, 2015; Bacescu-Carbunaru and Condruz-Bacescu, 2014) with direct impacts on the technical efficiency. According to these authors, the Common Agricultural Policy has been pivotal towards Romanian farmers prearranging them in facing with the new challenges of globalization in a perspective of environment and landscape protection (Tudor and The methodology based on the constant return to scale approach has highlighted an increase of technical efficiency which in average value shifted from 74.7% as assessed by Nowak et al in 2015 to 90.34% as estimated in this research (Burja, 2011). Over the time of investigation, Romanian farms belonging to the FADN dataset have had levels of technical and economic efficiency lower than results assessed in previous research, corroborating the importance for farmers of some actions finalized in increasing the land capital endowment, in improving crop specialization and in strengthening investments in new technologies.…”

“…Usually, the poorer is the agricultural area and farm size the lower is the level of efficiency and farmer's income (Lund and Hill, 1979;Alvarez and Arias, 2004;Galluzzo, 2013). Despite this conceptual theoretical framework, other authors in some European countries have pointed out as small farms, due to a simplified traditional organization and management of cropping system, have had better results in terms of technical and economic efficiency than large farms and corporate agrarian enterprises (Gorton and Davidova, 2004); hence, the farm size impacts partially on the level of technical efficiency (Nowak et al, 2015;Galluzzo, 2013;.…”

“…Recent findings in the estimation of efficiency in many European farms belonging to the FADN dataset have pointed out as technical efficiency is uncorrelated to the variable agricultural areas as it depends upon its own intrinsic features such as the quality of soil and other intangible variables (Nowak et al, 2015).…”

“…The main determinants affecting the efficiency in farms are technical capital, land capital, farm size, typology of farm's ownership and investments as estimated in other European countries (Slovenia, Poland, Italy) characterized by small farms (Nowak et al, 2015;Galluzzo, 2013). In Romanian rural areas, regional disparities, consequence of a low level of agrarian capital used by farms, are increasing with the effect of broadening the socioeconomic dichotomy among Romanian agrarian regions (Burja, 2012;Burja, 2011).…”