Technical Efficiency of Olive-growing Farms in the Northern West Bank of Palestine

Abstract

This study examines the firm-level technical efficiency of olive-growing farms in the West Bank of Palestine. Using a sample of 176 olive farms in the Jenin governorate collected during September 2015, we estimated the Cobb-Douglas stochastic frontier production function. The results suggest that higher levels of education of the head of farm households and farms with a higher density of olive trees are associated with higher technical efficiency. The introduction of irrigation had a marginal effect on upgrading efficiency. Enlarging the irrigated area had a negative effect, but increasing the number of years of irrigation had a positive impact on efficiency. While the impact of access to export markets on technical efficiency was negative and farms oriented towards domestic consumption of olive oil showed lower efficiency, access to markets through olive presses and middlemen contributed to improve efficiency. The results of the chosen half-normal model suggest that olive farms in Jenin have the potential to increase production by 51.4% through more efficient use of technology and production inputs. These results imply promotion of intensive farming with mature olive trees and expansion of market access could contribute to improve technical efficiency of olive farms in the West Bank even under severe geographical and geopolitical conditions.