Agric. Econ. - Czech, 2008, 54(4):158-165 | DOI: 10.17221/294-AGRICECON

Slovak agricultural farms in different regions - comparison of efficiency

Z. Sojková, Z. Kropková, V. Benda

Slovak University of Agriculture, Nitra, Slovak Republic

This paper presents the results of stochastic parametric approach used in estimation of production frontier. The estimation of output oriented technical efficiency was based on the Stochastic Frontier analysis with Cobb-Douglas production function. The model also included a dummy variable which expressed production conditions in which Slovak farms are operating. We divided farms into two groups regarding production conditions: productive regions (PR) and less favorable area (LFA) regions. The data set included 79 Slovak farms operating in different regions in the 2003-2005 time periods. The following input variables are included in the model: capital, material, labour and agricultural land according to the LPIS system. Total output was used as the output variable. From the achieved results, we can conclude that the significant statistical differences in average technical efficiency were detected only in year 2005 between the farms of the mentioned production conditions. A higher level of variability in technical efficiency was detected in farms operating in productive regions compared to technical efficiency of farms in the LFA regions.

Keywords: less favorable area (LFA), subsidy, stochastic production frontier, panel data, output - oriented technical efficiency, Cobb-Douglas production function

Published: April 30, 2008  Show citation