Abstract
The research follows neo-classical methodology to analyse the trends of the agricultural efficiency. The paper fits the stochastic production frontier to the micro data describing the performance of the Lithuanian family farms during 2004–2009 in order to define the current trends of efficiency and productivity in the sector. Indeed, this is the first application of stochastic frontiers to gauge the performance of Lithuanian family farms. The technical efficiency of the Lithuanian family farms fluctuated around 80%. The analysis confirmed that the livestock farms were peculiar with higher mean technical efficiency if compared to that of mixed or crop farms. The estimated partial output elasticities imply that the intermediate consumption was the most productive factor, whereas assets were four to six times less productive depending on the farming type. The land factor was peculiar with the lowest partial output elasticities. The research contributes to the wider discussion on the patterns of efficiency and productivity in a transition European Union Member States following the accession.
Highlights
Productivity and efficiency are the two important factors of competitiveness for any economic activity
The paper fitted the stochastic production frontier to the micro data describing the performance of the Lithuanian family farms during 2004–2009
The technical efficiency of the Lithuanian family farms fluctuated around 80%
Summary
Productivity and efficiency are the two important factors of competitiveness for any economic activity. Stochastic production frontier for the Lithuanian family farms success stories for inspiring change; identify best practices for how to manage change; and create a baseline or yardstick by which to evaluate the impact of earlier changes. Agricultural producers typically own land and live on their farms, the standard assumption that only efficient producers are to maintain their market activity usually does not hold in agriculture; suchlike adjustments would result in various social problems. The discussed issues require an appropriate methodology for estimation of productive efficiency in the agricultural sector. Chou et al (2012) employed stochastic frontier analysis to measure performance of the IT capital goods sectors across OECD countries. Latruffe et al (2004) applied both stochastic frontier analysis and data envelopment analysis to analyse the technical efficiency of the Polish farms. The research covers the period of 2004–2009 and relies on the reports of the Farm Accountancy Data Network
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