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Abstract
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
information was available from 1995 until 2007, excepting Hungary and Poland, for
which it was available only since 2004. Also note that not all the farm types were
available for all the countries.
The structure of the paper is as follows: it starts presenting an overview of the
metafrontier analysis used to compare technical efficiency amongst the European
countries. It is followed by the empirical work, which comprises a description of the data
used, the estimation and discussion of the results. Finally we present conclusions.