Technical efficiency and its determinants for Czech livestock farms

Abstract

Organic farming has become an important part of Czech agriculture. The aim of this study is an evaluation of the technical efficiency of Czech organic farms and determining the main factors, including subsidies, which affect the technical efficiency of both conventional and organic farms. The Farm Accountancy Data Network Czech Republic (FADN CR) database provides sufficient panel data for this kind of research focusing on types of farming with livestock production. The methodological tool used to achieve the aim of this paper is the parametric stochastic frontier analysis, “True” Random Effects model, supposing farms heterogeneity and time variant determinants of inefficiency. The results of the research verified differences in the technical efficiency of organic and conventional agriculture related both to the different farming methods and to the production conditions. The type of farming and the economic size of farms influence the farms’ profitability, economic performance and comparability with conventional farms. The technical efficiency of organic farming is growing over the long term. Farms with growing technical efficiency show a decline in the proportion of operating subsidies to production, irrespective of their classification in quartiles by the technical efficiency estimate.