IDEAS home Printed from https://ideas.repec.org/p/ags/iaae15/229061.html
   My bibliography  Save this paper

Are Farms in Less Favoured Areas Less Efficient?

Author

Listed:
  • Barath, Lajos
  • Ferto, Imre
  • Bojnec, Stefan

Abstract

This paper investigates farm technical efficiency (TE), taking into account technological heterogeneity among farms in the case of the Slovenian Farm Accountancy Data Network sample of farms in the 2007-2010 period. A random parameter model is used to analyse inter- and intra-sectoral heterogeneity of farms. The empirical results confirmed that it is important to handle both inter- and intra-sectoral heterogeneity. Additionally the estimations based on propensity score matching (PSM) demonstrated that farms in less favoured areas (LFAs) are slightly technically less efficient than farms in non-LFAs. However, combined PSM and difference in difference estimator cast serious doubts that LFA farms are less efficient in terms of TE. Both groups of farms are able to adopt technologies to natural and other conditions for their operation.

Suggested Citation

  • Barath, Lajos & Ferto, Imre & Bojnec, Stefan, 2015. "Are Farms in Less Favoured Areas Less Efficient?," 2015 Conference, August 9-14, 2015, Milan, Italy 229061, International Association of Agricultural Economists.
    • Handle: RePEc:ags:iaae15:229061
    DOI: 10.22004/ag.econ.229061
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/229061/files/Barath_Ferto_Bojnec_f.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.229061?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cechura, Lukas & Hockmann, Heinrich, 2011. "Efficiency and Heterogeneity in Czech Food Processing Industry," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114314, European Association of Agricultural Economists.
    2. William Greene, 2001. "Fixed and Random Effects in Nonlinear Models," Working Papers 01-01, New York University, Leonard N. Stern School of Business, Department of Economics.
    3. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    4. Andrea Pufahl & Christoph R. Weiss, 2009. "Evaluating the effects of farm programmes: results from propensity score matching," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 36(1), pages 79-101, March.
    5. Alvarez, Antonio & del Corral, Julio & Tauer, Loren W., 2012. "Modeling Unobserved Heterogeneity in New York Dairy Farms: One-Stage versus Two-Stage Models," Agricultural and Resource Economics Review, Cambridge University Press, vol. 41(3), pages 275-285, December.
    6. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    7. Bill Greene with Antonio Alvarez (Univ. of Oviedo) & Carlos Arias (Univ. of Leon), 2004. "Accounting For Unobservables In Production Models: Management And Inefficiency," Econometric Society 2004 Australasian Meetings 341, Econometric Society.
    8. Efthymios G. Tsionas, 2002. "Stochastic frontier models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(2), pages 127-147.
    9. Susan Athey & Guido W. Imbens, 2006. "Identification and Inference in Nonlinear Difference-in-Differences Models," Econometrica, Econometric Society, vol. 74(2), pages 431-497, March.
    10. Stefan Bojnec & Laure Latruffe, 2009. "Determinants of technical efficiency of Slovenian farms," Post-Communist Economies, Taylor & Francis Journals, vol. 21(1), pages 117-124.
    11. Juan M. Villa, 2009. "DIFF: Stata module to perform Differences in Differences estimation," Statistical Software Components S457083, Boston College Department of Economics, revised 31 Dec 2019.
    12. Alberto Abadie & David Drukker & Jane Leber Herr & Guido W. Imbens, 2004. "Implementing matching estimators for average treatment effects in Stata," Stata Journal, StataCorp LP, vol. 4(3), pages 290-311, September.
    13. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    14. Awudu Abdulai & Hendrik Tietje, 2007. "Estimating technical efficiency under unobserved heterogeneity with stochastic frontier models: application to northern German dairy farms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 34(3), pages 393-416, September.
    15. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    16. Barbara Sianesi, 2004. "An Evaluation of the Swedish System of Active Labor Market Programs in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 133-155, February.
    17. Cechura, L. & Hockmann, H. & Malý, M. & Žáková Kroupová, Z., 2015. "Comparison of Technology and Technical Efficiency in Cereal Production among EU Countries," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 7(2), pages 1-11, June.
    18. Štefan Bojnec & Imre Fertő, 2013. "Farm income sources, farm size and farm technical efficiency in Slovenia," Post-Communist Economies, Taylor & Francis Journals, vol. 25(3), pages 343-356, September.
    19. 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.
    20. 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.
    21. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
    22. Xiaobing Wang & Heinrich Hockmann & Junfei Bai, 2012. "Technical Efficiency and Producers’ Individual Technology: Accounting for Within and Between Regional Farm Heterogeneity," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 60(4), pages 561-576, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lajos Baráth & Imre Fertő & Štefan Bojnec, 2020. "The Effect of Investment, LFA and Agri‐environmental Subsidies on the Components of Total Factor Productivity: The Case of Slovenian Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 853-876, September.
    2. repec:ags:aaea22:335541 is not listed on IDEAS
    3. Ali M. Oumer & Michael Burton & Atakelty Hailu & Amin Mugera, 2020. "Sustainable agricultural intensification practices and cost efficiency in smallholder maize farms: Evidence from Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 51(6), pages 841-856, November.
    4. Štefan Bojnec & Kristina Knific, 2021. "Farm Household Income Diversification as a Survival Strategy," Sustainability, MDPI, vol. 13(11), pages 1-16, June.
    5. Mauro Vigani & Janet Dwyer, 2020. "Profitability and Efficiency of High Nature Value Marginal Farming in England," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(2), pages 439-464, June.
    6. Jerzy Marzec & Andrzej Pisulewski, 2021. "Measurement of technical efficiency in the case of heterogeneity of technologies used between firms - Based on evidence from Polish crop farms," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(4), pages 152-161.
    7. Tamara Rudinskaya & Tomas Hlavsa & Martin Hruska, 2019. "Estimation of technical efficiency of Czech farms operating in less favoured areas," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(10), pages 445-453.
    8. Marzec, Jerzy & Pisulewski, Andrzej, 2019. "The Measurement of Time Varying Technical Efficiency and Productivity Change in Polish Crop Farms," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 68(1), March.
    9. Nicola GALLUZZO, 2022. "Agritourism And Less Favored Areas Subsidies Impact On Technical Efficiency Of Italian Farms," Agricultural Economics and Rural Development, Institute of Agricultural Economics, vol. 19(1), pages 61-75.
    10. Nicola Galluzzo, 2021. "Estimation of the impact of CAP subsidies as environmental variables on Romanian farms," Economia agro-alimentare, FrancoAngeli Editore, vol. 23(3), pages 1-24.
    11. Wawrzyniec Czubak & Krzysztof Piotr Pawłowski, 2020. "Sustainable Economic Development of Farms in Central and Eastern European Countries Driven by Pro-investment Mechanisms of the Common Agricultural Policy," Agriculture, MDPI, vol. 10(4), pages 1-19, March.
    12. Galluzzo Nicola, 2020. "A Technical Efficiency Analysis of Financial Subsidies Allocated by the Cap in Romanian Farms Using Stochastic Frontier Analysis," European Countryside, Sciendo, vol. 12(4), pages 494-505, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lajos Baráth & Imre Fertő & Štefan Bojnec, 2020. "The Effect of Investment, LFA and Agri‐environmental Subsidies on the Components of Total Factor Productivity: The Case of Slovenian Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 853-876, September.
    2. Fertő, Imre & Bakucs, Zoltán & Varga, Ágnes, 2016. "Impact of EU subsidies on the of rural areas in Hungary," 160th Seminar, December 1-2, 2016, Warsaw, Poland 249826, European Association of Agricultural Economists.
    3. Lajos Barath & Heinrich Hockmann, 2016. "Technological differences, theoretically consistent frontiers and technical efficiency: a Random parameter application in the Hungarian crop producing farms," IEHAS Discussion Papers 1636, Institute of Economics, Centre for Economic and Regional Studies.
    4. Farsi, Mehdi & Filippini, Massimo, 2009. "An analysis of cost efficiency in Swiss multi-utilities," Energy Economics, Elsevier, vol. 31(2), pages 306-315, March.
    5. Lajos Baráth & Imre Fertő & Heinrich Hockmann, 2020. "Technological Differences, Theoretical Consistency, and Technical Efficiency: The Case of Hungarian Crop-Producing Farms," Sustainability, MDPI, vol. 12(3), pages 1-18, February.
    6. Mehdi Farsi & Massimo Filippini & William Greene, 2006. "Application Of Panel Data Models In Benchmarking Analysis Of The Electricity Distribution Sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 77(3), pages 271-290, September.
    7. Zoltán Bakucs & Imre Fertő & Zsófia Benedek, 2019. "Success or Waste of Taxpayer Money? Impact Assessment of Rural Development Programs in Hungary," Sustainability, MDPI, vol. 11(7), pages 1-23, April.
    8. Bakucs, Z. & Ferto, I., 2018. "Analysis of Regional Development Convergence at Sub-National Level. The Case of Hungary," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277230, International Association of Agricultural Economists.
    9. Antonio Alvarez & Carlos Arias, 2014. "A selection of relevant issues in applied stochastic frontier analysis," Economics and Business Letters, Oviedo University Press, vol. 3(1), pages 3-11.
    10. Orea, Luis, 2019. "The Econometric Measurement of Firms’ Efficiency," Efficiency Series Papers 2019/02, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    11. Bakucs Zoltán & Fertő Imre, 2019. "Convergence or Divergence? Analysis of Regional Development Convergence in Hungary," Eastern European Countryside, Sciendo, vol. 25(1), pages 121-143, December.
    12. Mishra, Ashok K. & Kumar, Anjani & Joshi, Pramod K. & D'souza, Alwin, 2016. "Impact of contracts in high yielding varieties seed production on profits and yield: The case of Nepal," Food Policy, Elsevier, vol. 62(C), pages 110-121.
    13. Fertő, Imre & Baráth, Lajos, 2013. "Heterogenitás és technikai hatékonyság - a magyar specializált szántóföldi növénytermesztő üzemek esete [Heterogeneity and technical efficiency - the case of Hungarys specialized arable crop produc," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 650-669.
    14. Kellermann, Magnus A., 2015. "Total Factor Productivity Decomposition and Unobserved Heterogeneity in Stochastic Frontier Models," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 44(1), pages 1-25, April.
    15. K Hervé Dakpo & Laure Latruffe & Yann Desjeux & Philippe Jeanneaux, 2022. "Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 422-438, May.
    16. Bac Ho & Teruaki Nanseki & Yosuke Chomei, 2019. "Profit efficiency of tea farmers: case study of safe and conventional farms in Northern Vietnam," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 21(4), pages 1695-1713, August.
    17. Antti Saastamoinen, 2015. "Heteroscedasticity Or Production Risk? A Synthetic View," Journal of Economic Surveys, Wiley Blackwell, vol. 29(3), pages 459-478, July.
    18. Galina Besstremyannaya, 2011. "Managerial performance and cost efficiency of Japanese local public hospitals: A latent class stochastic frontier model," Health Economics, John Wiley & Sons, Ltd., vol. 20(S1), pages 19-34, September.
    19. Goddard, John & Molyneux, Philip & Williams, Jonathan, 2014. "Dealing with cross-firm heterogeneity in bank efficiency estimates: Some evidence from Latin America," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 130-142.
    20. Abdul Wadud, 2013. "Impact of Microcredit on Agricultural Farm Performance and Food Security in Bangladesh," Working Papers 14, Institute of Microfinance (InM).

    More about this item

    Keywords

    Agricultural and Food Policy; Farm Management;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:iaae15:229061. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/iaaeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.