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Technical efficiency analysis and decomposition of productivity growth of Spanish olive farms

Author

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  • Lambarraa, Fatima
  • Serra, Teresa
  • Gil Roig, Jose Maria

Abstract

The concept of technical efficiency is critical to measuring the firm performance, determining the degree of innovative technology adoption and the overall production efficiency. Traditionally, technical efficiency has been measured as the ratio of observed output to maximum feasible output. Stochastic frontier models have been widely utilized to assess this issue. Our research evaluates technical efficiencies in the Spanish olive sector. Specifically, the main objective of this study is to estimate a stochastic frontier production model by using a farm- level panel of data. The non- negative technical efficiency effects are assumed to be a function of firm- specific variables. A sample of Spanish farms observed from 1999 to 2002 is obtained from the FADN dataset and used in the estimation of the model. Maximum- likelihood methods are applied in the estimation of the parameters of the model. A primal approach is used to decompose Total Factor Productivity (TFP) growth. Results indicate that farm location, age of manager, tenure regimes of land and whether the farm has adopted organic farming techniques affect efficiency levels . Technical efficiency change, allocative efficiencies and scale effects are found to be the main sources of TFP growth, while technical change seems to be of minor importance. Results also suggest that Spanish olive farms are less efficient relative to other EU farms. This suggests that improvements in the Spanish olive productive capacity after the accession to the EU were not fully implemented in the period of analysis. This may be due to a decline in olive farm incomes as a result of a decline in both public subsidies and in output prices after the mid 1990s.

Suggested Citation

  • Lambarraa, Fatima & Serra, Teresa & Gil Roig, Jose Maria, 2006. "Technical efficiency analysis and decomposition of productivity growth of Spanish olive farms," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10071, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae98:10071
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    File URL: http://purl.umn.edu/10071
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    References listed on IDEAS

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    1. repec:ags:nejare:v:30:y:2001:i:2:p:168-178 is not listed on IDEAS
    2. Konstantinos Giannakas & Kien C. Tran & Vangelis Tzouvelekas, 2003. "On the choice of functional form in stochastic frontier modeling," Empirical Economics, Springer, vol. 28(1), pages 75-100, January.
    3. Vangelis Tzouvelekas & Konstantinos Giannakas & Peter Midmore & Konstantinos Mattas, 1997. "Technical efficiency measures for olive-growing farms in Crete, Greece," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 3(2), pages 154-169, May.
    4. Karagiannis, Giannis & Tzouvelekas, Vangelis, 2001. "Self-Dual Stochastic Production Frontiers And Decomposition Of Output Growth: The Case Of Olive-Growing Farms In Greece," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 30(2), October.
    5. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    6. Bauer, Paul W., 1990. "Recent developments in the econometric estimation of frontiers," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 39-56.
    7. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    8. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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    Cited by:

    1. Jara-Rojas, Roberto & Bravo-Ureta, Boris & Solis, Daniel & Martinez, Daniela, 2016. "Production efficiency and commercialization channels among small-scale farmers: Evidence for raspberry production in Central Chile," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229330, Southern Agricultural Economics Association.
    2. Dios-Palomares, Rafaela & Martínez-Paz, José M., 2011. "Technical, quality and environmental efficiency of the olive oil industry," Food Policy, Elsevier, vol. 36(4), pages 526-534, August.
    3. repec:oup:apecpp:v:39:y:2017:i:3:p:428-440. is not listed on IDEAS

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