Abstract
Abstract Sardinia (Italy) is one of the most important European regions for sheep dairy and sheep milk cheese production. However the Sardinian sheep dairy industry is currently going through a dramatic crisis, and verifying whether it can recover part of its profitability is now a priority. Attention is now focused on estimating whether the sheep dairy firms can improve their productivity by more efficient use of their available technical resources. This paper aims to estimate technical efficiency in the Sardinian sheep dairy industry. A stochastic frontier analysis approach was used on panel data from 36 sheep dairy firms over the period 2004–2009 in order to assess whether there are some margins for technical improvements in productivity, given the existing level of technology. A comparative analysis of private firms and cooperatives was also carried out, in order to establish if there were differences in the technology they used and/or their efficiency in using technical inputs. Our findings suggest that there is technological homogeneity among the firms and between private firms and cooperatives. Technical efficiency is equal to 0.905 and it is significantly different between private firms (0.933) and cooperatives (0.877). Our findings have certain implications for what policies should be implemented in order to improve efficiency in the sector and on the orientation of decision makers strategies.
Highlights
Sardinia (Italy) is one of the most important EU regions for sheep dairy production. It has more than 3.5 million sheep (3.7% of the EU total in 2009) [a] that totally produce more than 300,000 MT of milk. This quantity corresponds to about 4% of total world production (Istat, 2011; FAO, 2011; Eurostat 2011) and the sheep milk is processed into different types of cheese
Technical efficiency and the Stochastic Frontier Analysis (SFA) According to Farrell’s well-known model (Farrell 1957), technical efficiency is defined as the measure of the ability of a firm to obtain the best production from a given set of inputs, or as a measure of the ability to use the minimum feasible amount of inputs, given a determined level of output (Greene, 1980; Atkinson and Cornwell, 1994) [b]
This sub-section briefly illustrates how technical efficiency output-oriented measures can be obtained from Stochastic Frontier Analysis (SFA) models
Summary
Sardinia (Italy) is one of the most important EU regions for sheep dairy production. It has more than 3.5 million sheep (3.7% of the EU total in 2009) [a] that totally produce more than 300,000 MT of milk. Sardinia produces approximately 50–60 thousand MT of cheese a year, manufactured by more than 50 dairy factories, about half of which are cooperatives. More than half of the cheese produced is Pecorino Romano (PR), one of the most important sheep cheeses in the world. An average of 29,100 MT of PR a year was produced between 2000 and 2009 (Consorzio per la tutela del formaggio Pecorino Romano, 2011). As Sardinia is the largest supplier of PR to the USA, Sardinian PR represents about 70%
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