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Heterogeneity in the Level of Technical Efficiency of Farms in the European Union Regions and its Relationship to Indebtedness

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  • Staniszewski Jakub

    (PhD, Institute of Economics, Poznań University of Economics and Business; Al. Niepodległości 10, 61-875 Poznań, Poland)

Abstract

Aim The purpose of the study is to determine the relationship between the level of farm indebtedness and their technical efficiency. Material and Methods In the paper Greene’s “true” fixed effects model and regional Farm Accountancy Data Network data are used to calculate efficiency and its determinants in the stochastic frontier analysis framework. Results The results indicate that higher dependence on external capital deteriorates technical efficiency level. The existence of increasing returns to scale in the EU agriculture and important role of structural factors (region-specific heterogeneity) is proven as well. The latter disturbs the traditional division between ‘new’ and ‘old’ Member States in terms of agricultural production efficiency. Conclusions Assuming that debt increases as a consequence of the investments, the results may indicate overinvestment. It may be caused by the ease of obtaining loans on preferential terms or by the need to finance green investments which do not translate into production growth. This conclusion reveals the need to better address credit-based support instruments. On the other hand, investments, in particular those of innovative nature, may disturb standard production process and increase efficiency only in the long run.

Suggested Citation

  • Staniszewski Jakub, 2025. "Heterogeneity in the Level of Technical Efficiency of Farms in the European Union Regions and its Relationship to Indebtedness," Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics, Sciendo, vol. 382(1), pages 57-84.
    • Handle: RePEc:vrs:zerpae:v:382:y:2025:i:1:p:57-84:n:1005
    DOI: 10.30858/zer/199953
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    References listed on IDEAS

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    1. Marta Guth & Katarzyna Smędzik-Ambroży, 2020. "Economic resources versus the efficiency of different types of agricultural production in regions of the European union," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 33(1), pages 1036-1051, January.
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    More about this item

    Keywords

    production efficiency; farm indebtedness; stochastic frontier analysis; FADN;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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