Breathing room in farm management as determined by inefficiency measurements

Abstract

This paper begins with a brief survey of the literature relating to the idea of inefficiency and how it relates to management. The concept of technical inefficiency is defined in this paper as being the difference between the observed production level and the maximum attainable level of output which could be theoretically reached if the input were to be used in a technically efficient manner. Measure of technical efficiency of three different farm types ( pigs alone, pigs and herbivores, pigs and granivores (poultry)) is given for the year 1991 using a nonparametric method, Data Envelopment Analysis (DEA) based on linear programming techniques. The initial results, on average, revealed that the producers of pigs alone had the greatest efficiency. These farmers tended to be younger and had received better training than the two other groups of farmers. These results also seemed to be linked to the greater homogeneity in production techniques in use and to the preponderence of variable factors involved in the production process as compared to the quasi-fixed factors. For the pig and herbivore farmers, both the most and least efficient producers tended to involve dairy farms. The performance differences between these were explained by a better use of intermediate level consumptions on the more efficient farms. The pig and poultry group had efficiency values approaching those of the pig alone group, but their characteristics were less pronounced. Environmentally, the possibility of increasing technical efficiency and while decreasing the production of nitrogen waste seemed only possible on the mixed farms (pig and herbivore or granivore). The maneuvering room available for improving farm technical efficiency concerns, in the short term, the costs relating to the production of vegetable products, primarily, and in the long term, the cost of land and material, in particular for farms involving bovines. In conclusion, the efficiency measure indicated that cost savings are possible if the production scale is modified on 52% of the farms considered, no matter what their type.