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Pig farming is one of the strongest polluters of water resources due to its intensive production techniques and slurry rejection. Several European countries have already introduced environmental regulations aiming at reducing the pollution caused by nitrates from agricultural sources, but not yet Hungary. This paper investigates how Hungarian pig farms would be affected if such regulations are to be enforced. We calculate farm technical efficiency separately for two types of pig production systems – namely farrowing only and farrow-to-finish farms (FAFI farms) and finishing only farms (FI farms) – using 2001 data on pig activity and Data Envelopment Analysis (DEA). We then investigate whether environmental regulations would affect the farms’ technical efficiency, with the help of a second-stage regression and various environmental pressure proxies. Results indicate that the pollution could be reduced with no impact on the output level, and that Hungarian pig farmers have incentives to reduce nitrogen pollution in order to increase their efficiency even in the absence of regulation.


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