A Metafrontier Analysis of Technical Efficiency of Selected European Agricultures
Technical efficiency refers to the situation where it is impossible for a firm to produce, with the given know-how, (1) a larger output from the same inputs or (2) the same output with less of one or more inputs without increasing the amount of other inputs. In practice, the interest is on the relative position in terms of efficiency of a particular firm with respect to others. Therefore, technical efficiency is characterised by the relationship between observed production and some ideal or potential production (Greene, 1993). Although the beginning of the efficiency work can be traced to the 1950s (Farrell, 1957), there have been a growing interest on its use in benchmarking performance, predominantly as a means of identifying best practice and improving the efficiency of resource use within the agricultural industry (e.g., Defra 2004, SAC 2009). This paper deals with the estimation of technical efficiency for the agricultural sectors in several European countries and moreover, it aims to compare the efficiency amongst them using a metafrontier analysis. The use of this type of analysis is justified because a frontier, which represents the best available technology within a particular region/country cannot be strictly compared across other regions/countries, unless they operate under the same production set. The metafrontier analysis has been developed in a number of studies (Battese and Rao, 2002; Nkamleu et al., 2006; Chen and Song, 2006; O‟Donnell et al., 2008.) The metafrontier analysis in this paper, which uses data from the Farm Accountancy data Network (FADN), was focused on four farm types: two specialised farming types (i.e., specialist cereals, oilseed and protein crops and specialist dairying) and two more mixed farming sets (i.e., general field cropping and mixed farms), and was applied to a total of 11 countries namely Belgium, Denmark, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Spain and the UK. For most of the countries the infor
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CEPA Working Papers Series
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- Christopher O’Donnell & D. Rao & George Battese, 2008. "Metafrontier frameworks for the study of firm-level efficiencies and technology ratios," Empirical Economics, Springer, vol. 34(2), pages 231-255, March.
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