Abstract
We used a stochastic production frontier and a Tobit model to evaluate technical efficiency and inefficiency of Bulgarian limited resource peanut farms for the period 2000/2002. We used a Just-Pope model to examine risks related to on-farm yield adjustments. Technical efficiency of farms ranged from 77 to 97%, with an average 92%, a median of 93%, mode of 90%, and skewness -1.49. The technical efficiency of these farms are largely influenced by on-farm decisions, the quantity of seeds, phosphate, fungicide, the amount investment capital, hours of manual labor used, and leased mechanized labor. The results indicate that efficiency is more crop specific than farm size dependent. Farm inefficiency was unrelated to size but rather to gender and age of operator. Farmers used less than the optimum levels of seeds and phosphate but there was risk associated with an increase in application rates of these inputs. These findings indicate that limited resource Bulgarian peanut farms are approaching efficiency, and adjustment to attain greater efficiency may be influenced by socio-demographic factors and limited government intervention. Key words: Production, efficiency, peanuts, Bulgaria.
Highlights
Agriculture is the backbone of the Bulgarian economy
Policy makers and researchers are worried that Bulgaria will not be competitive as a member of the World Trade Organization (WTO) because its small farm sizes limit the commercialization of agriculture
The results show that peanut production in Bulgaria is approaching full efficiency and that factors leading to efficiency may vary
Summary
Agriculture is the backbone of the Bulgarian economy. It employs about 26.2% of the labor force and contributes 17.3% to the gross domestic product (GDP) (Totev and Shahollari, 2001). There are advocates who favor policies to expand farm size to enhance production efficiency (Lulcheva and Todolrova, 2005) without prior examination of the technical efficiency and resource substitution at the farm level. Peanut seemed to be a logical crop choice for farm income enhancement during the post-transition period (period after 1989 there was a transformation in the society) because the soil and environmental conditions in southern Bulgaria and the Plovdiv region favor its production. Given that peanut can be produced with limited external inputs and can be grown profitably under large or small scale conditions, it is important to examine the technical efficiency related to its production as new market opportunities open up for Bulgarian farm products, and the government is coerced to adopt new land tenure policies. The factors influencing production efficiency and how the efficiency of small and large farms can be improved are yet to be analyzed separately
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