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Structural Change and Technical Change in Polish Agriculture: An Adjustment Cost Approach with Technical and Allocative Efficiency

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  • Rungsuriyawiboon, Supawat
  • Hockmann, Heinrich

Abstract

This paper aims to understand the state of adjustment process and dynamic structure in Polish agriculture. A dynamic cost frontier model using the shadow cost approach is formulated to decompose cost efficiency into allocative and technical efficiencies. The dynamic cost efficiency model is developed into a more general context with a multiple quasi-fixed factor case. The model is implemented empirically using a panel data set of 1,143 Polish farms over the period 2004 to 2007. Due to the regional disparities and a wide variety of farm specialization, farms are categorized into two regions and five types of farm production specialization. The estimation results confirm our observation that adjustment is rather sluggish implying that adjustment cost are considerably high. It takes up to 30 years until Polish farmers reach their optimal level of capital and land input. Allocative and technical efficiency differ widely across regions. Moreover, efficiency is rather stable over time and among farm specialisations. However, their results indicate that the regions characterized by the larger farms perform slightly better.

Suggested Citation

  • Rungsuriyawiboon, Supawat & Hockmann, Heinrich, 2012. "Structural Change and Technical Change in Polish Agriculture: An Adjustment Cost Approach with Technical and Allocative Efficiency," 131st Seminar, September 18-19, 2012, Prague, Czech Republic 135777, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa131:135777
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    File URL: http://purl.umn.edu/135777
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    Keywords

    Polish agriculture; dynamic efficiency; adjustment cost; shadow cost approach; Agribusiness; Agricultural and Food Policy; D21; D61; Q12;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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