Measures of farm business efficiency.
ABSTRACT Purpose – The aim of this paper is to investigate technical, scale, allocative and economic efficiencies by data envelopment analysis (DEA) and stochastic frontier methods to provide a decision-making tool and managerial implications in the measurement of farm business performance and efficiency. Design/methodology/approach – Technical, scale, allocative and economic efficiencies are analyzed with the Farm Accountancy Data Network (FADN) sample for 13 farm business branches in Slovenia in the period 1994-2003. DEA models are used with an output-orientation, three outputs and four inputs. The non-parametric DEA estimations are compared with a parametric stochastic frontier approach. The cluster analysis is used to identify three different farm business groups according to their performance. Findings – The average technical, scale, allocative and economic efficiencies for the whole FADN sample over the analyzed period are relatively high (around or over 0.90), suggesting that, although the FADN sample contains very different farms, the latter have similar management practices, and are similarly able to make the best use of the existing technology. Five farm branches (crop, dairy, livestock using own feed, fruit, and forestry) are fully efficient with respect to all four analyzed efficiency measures, suggesting that these specializations have the best chance to compete on the European and world markets. Originality/value – Studies of technical, scale, allocative and economic efficiencies are rare for transitional farm businesses, especially in Slovenia. The research contributes to the crucial issue of whether small family farm businesses might be able to compete on international markets, as Slovenian agriculture is characterized by such structures.
- IJSS. 01/2007; 3:249-261.
- International Journal of Management and Enterprise Development - Int J Manag Enterprise Dev. 01/2004; 1(4).
- [show abstract] [hide abstract]
ABSTRACT: This article investigates the determinants of technical efficiency of Slovenian farms during the transition to a market economy and before accession to the European Union (1994-2003). Both the parametric stochastic frontier and the non-parametric data envelopment analysis (DEA) methods show that the degree of technical efficiency has increased during the transition, and that farm specialisation associated with technological change is found to be a crucial determinant for increasing technical efficiency. A negative impact of farm commercialisation on technical efficiency is found, explained by the specific nature of livestock farms, in particular, with intra-farm intermediary consumption. The use of hired labour has no significant influence, but mixed results are found for rented land. The results suggest possible sources of imperfections in farm input markets.Post Communist Economies 21(1):117-124. · 0.46 Impact Factor