Article

Measures of farm business efficiency

Industrial Management & Data Systems (Impact Factor: 1.23). 03/2008; 108(2):258-270. DOI: 10.1108/02635570810847617
Source: DBLP

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.

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    • "The efficiency of grape farms in an economy in transition context has very rarely been analysed (e.g. Bojnec and Latruffe, 2008; Kopeva and Noev, 2001). Even though grape production occupies a large share of the agricultural output of Western Balkan countries (WBCs: Serbia, Macedonia, Montenegro), and Early Transition Countries (ETCs: Moldova, Uzbekistan, Tajikistan, Georgia, etc.), empirical evidence on the efficiency of grape-growing farms does not exist. "

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    • "The efficiency of grape farms in an economy in transition context has very rarely been analysed (e.g. Bojnec and Latruffe, 2008; Kopeva and Noev, 2001). Even though grape production occupies a large share of the agricultural output of Western Balkan countries (WBCs: Serbia, Macedonia, Montenegro), and Early Transition Countries (ETCs: Moldova, Uzbekistan, Tajikistan, Georgia, etc.), empirical evidence on the efficiency of grape-growing farms does not exist. "

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