Optimizing the Technical Efficiency of Farms in Mountain Areas

Krasimira Kaneva

Abstract: The article discusses the technical efficiency of farms in mountain areas. The goal is to reduce the size of inputs so that farms operate at optimum efficiency. The solution is implemented in two variants, the first option not taking into account the subsidies, and in the second they are added to the gross output. The “Data Envelopment Analysis” (DEA) is applied in the study. Data for mountain holdings are taken from the Farm and Accounting Information System Survey (FADN, 2013). Results show that farms in mountain areas are technically inefficient, but the efficiency increases with the addition of subsidies to Gross Output. Unsatisfactory governance contributes to a greater extent to low overall efficiency than the irrational size of holdings. Indicative for this is a lower pure technical efficiency compared to scale efficiency. The subsidy system stimulates extensive land use, resulting in the first option that the relative “surplus” of land is higher than that of labor and production costs. In the second option, labor “surplus” is the highest due to the slower increase in Gross Output on fruit-growing farms while retaining a high level of labor force.

Keywords: farms; mountain areas; technical efficiency

Date published: 2019-01-16