The Spanish Horticulture Sector: A dynamic efficiency analysis of Outdoor and Greenhouse farms
The horticulture sector plays a relevant role in Spanish agriculture and economy. Their participation in the final agricultural production reached 37% and it represents an important source of employment generating the half of the job in the entire Spanish agricultural sector (MARM, 2010). The purpose of this paper is the evaluation of dynamic technical efficiency for both outdoor and greenhouse Spanish farms specialized in horticulture production. A dynamic stochastic frontier model is developed to estimate the long run technical efficiency and it persistence for both samples. This analysis has been applied to 126 and 90 Spanish greenhouses and outdoor horticulture farms respectively using Farm Accounting Data Network. Those farms were observed during 6 years from 1999 to 2004. The static efficiency level of greenhouse farms is higher than outdoor farms by approximately 12%. The evolution of the static efficiency level during the studied period shows an increase by 15% in the greenhouse farms comparing to a decrease by 11% for outdoor horticulture farms. This difference can be explained by a best control of the use of different inputs in the case of greenhouse horticulture as well as the implantation of high technology that improves efficiency level over years. The empirical results also show a big difference of level between static and dynamic technical efficiency for both samples. These results are consistent with the high value of the technical inefficiency persistence parameter for both cases which suggests that the technical inefficiency is highly persistent and shows a strong competition in this sector.
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