Efficiency Measures in the Agricultural Sector by Armando B. Mendes Emiliana L. D. G. Soares Silva & Jorge M. Azevedo Santos

Author:Armando B. Mendes, Emiliana L. D. G. Soares Silva & Jorge M. Azevedo Santos
Language: eng
Format: epub
Publisher: Springer Netherlands, Dordrecht

2006

372

0.722 (0.166)

0.097

0.661 (0.137)

0.617 (0.163)

0.712 (0.125)

2007

345

0.714 (0.161)

0.07

0.657 (0.138)

0.617 (0.129)

0.704 (0.158)

2008

380

0.731 (0.148)

0.095

0.677 (0.122)

0.635 (0.113)

0.724 (0.145)

2009

356

0.633 (0.177)

0.059

0.563 (0.142)

0.517 (0.125)

0.620 (0.172)

Mean 2000–2009

3509

0.723 (0.164)

0.094

0.664 (0.139)

0.621 (0.128)

0.714 (0.162)

The values presented in brackets are standard deviations

Table 7.2 shows that during the period under investigation, on average dairy processing firms in this sample had relatively high levels of efficiency of 0.723 with a standard deviation of 16.4%. However, the fraction of firms that was classified as efficient is rather low (approximately 9.4%). The analysis of the bias-corrected efficiencies shows that mean efficiency of the sample decreases to 0.664 with a standard deviation of 13.9%. This value indicates that there was a scope for efficiency improvement for firms by reducing the inputs. The confidence intervals show that the values of bias-corrected efficiency scores were contained in the set between 0.621 and 0.714. Furthermore, Table 7.2 reveals fluctuations of efficiencies in the period analysed as well as a reduction in efficiency between 2000 and 2009, especially considerable in 2009. In this year, milk prices dropped to historically low levels in Spain. Delivery of milk to the dairy processing firms declined as well as the production of value-added products like cheese and basic products like butter and milk powder (Eurostat 2012), which might explain the efficiency decline. The efficiency scores in this study were higher than the score of 0.56 found for the entire Spanish food and beverages by Martin-Marcos and Suarez-Galvez (2000). The scores were also higher than these found for dairy processing firms in Belgium, Denmark, France, Germany, Ireland and the Netherlands by Soboh et al. (2012). This suggests that dairy processing firms were on average closer to their own frontier than the firms in the six EU countries in the study of Soboh et al. (2012).

Given that variation in efficiency scores in the sample may be due to differences in their size, the comparison of the bias-corrected indices across four size intervals based on the number of employees and turnover according to the EU definition of micro, small, medium and large firms was made. Following this definition, the category of micro/small/medium firms was made up of enterprises which employ less than 10/50/250 employees and which have an annual turnover not exceeding 2/10/50 million euros, respectively. The firms with more than 250 employees and an annual turnover exceeding 50 million euros are defined as large. These results are presented in Table 7.3.Table 7.3Bias-corrected efficiency scores by firms’ sizes (2000–2009)

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