Fatima Lambarraa

Technical efficiency analysis and decomposition of productivity growth of Spanish olive farms

Spain occupies the first position in worldwide rankings of olive oil production and trade. This analysis assesses the relative technical efficiency with which this sector is operating. The concept of technical efficiency is critical to measuring the performance of a firm, determining the degree of innovative technology adoption and the overall production efficiency. Specifically, the main objective of this study is to assess the relative technical efficiency and to decompose the productivity growth of Spanish olive farms. Technical efficiency effects are assumed to be a function of firm-specific characteristics. Maximum-likelihood methods are applied to the estimation of the model. A primal approach is used to decompose total factor productivity (TFP) growth into its various components. Results indicate that farm location, age of manager, as well as the composition of the workforce affect efficiency levels. Technical efficiency changes and scale effects are found to be the main sources affecting TFP growth.

Policy impact on technical efficiency of Spanish olive farms located in less-favored areas

Abstract The olive sector has an important social, economic, and environmental role in Spain. This production activity is distinguished by a large number of small farms, located mainly in less-favored areas (LFA). The main objective of this study is to analyze the determinant factor of farms’ technical efficiency as well as the impact of LFA payment on such efficiency. To achieve this objective, we used a Stochastic Frontier approach and a random-effect Tobit regression. A two balanced panel data sample of Spanish olive farms observed from 2000 to 2004 is obtained from the Farm Accountancy Data Network dataset. Results show that technical efficiency scores seem to be positively correlated with farm size, and age of manager, and negatively to farm renting cultivated land. The workforce composition shows that farms with a higher proportion of family labor, not receiving payments are more efficient relative to the farms with a higher proportion of remunerated work. The results also suggest a negative direct impact of the LFA aid scheme on the technical efficiency of LFA olive farms.