An analysis of technical efficiency and the effect of CAP subsidies on Italian chestnut farming

Nicola Galluzzo

Abstract: For many rural areas of Italy, particularly hilly and mountain landscapes such as the Apennines and the Alps, the chestnut represents a typical tree crop. However, whilst various studies have analysed technical efficiency in relation to olive, wine, and citrus production, finding that land capital endowment is one of the most important inputs able to impact productivity and technical efficiency in those sectors, technical efficiency in Italian chestnut farming has not previously been investigated. The purpose of this study, then, was to assess through a quantitative approach the level of technical efficiency in chestnut farming in various Italian provinces following the NUTS 3 classification standard, and using a dataset of farms specialised in chestnut cultivation that are included in the Italian Farm Accountancy Data Network (FADN) and that received some form of CAP subsidy during the period 2008–2020. Moreover, using the results of this analysis, the study aims to evaluate the specific role that subsides allocated through the first and second pillars of the CAP have had on technical efficiency in this sector.
The findings reveal that financial subsides allocated under the first pillar of the Common Agricultural Policy have impacted technical efficiency in a positive way. The novelty of this research lies in its assessment of technical
efficiency in relation to chestnut farming. Moreover, through the use of Multi-directional Efficiency Analysis, it has been possible to assess patterns of technical inefficiency in farming in some Italian provinces where chestnuts are cultivated.

Keywords: DEA; FADN; first pillar of CAP; MEA

Date published: 2023-06-30