Efficiency and productivity growth of crop oriented farms partisipating in the European Union farm credit program (Re. 2328/91)

Abstract

This paper investigates efficiency and productivity growth of Greek farms participating in
the 1994 European Union (EU) farm credit program.
The DEA methodology is used to measure technical efficiency and the Malmquist productivity
index to measure and decompose productivity growth.
The results indicate that the program has failed to increase average efficiency of crop oriented
farms with the major source of inefficiency being primarily inefficient use of technology,
and secondarily improper scale operation.
The paper also investigates a number of factors influencing technical efficiency of farms using
the Tobit approach. Among the factors showing a negative effect on technical efficiency is
the value of investments incurred by the farm due to its participation in the 1994 farm credit
program.
The results show that total factor productivity growth for crop oriented farms decreased by
about 5.4% per year, which is attributed mainly to an efficiency deterioration of about 4.9% per
year and secondarily to a technical regress of about 0.6% per year, indicating that crop oriented
farms failed to increase their productivity growth primarily due to the inefficient use of the new
technology provided by the program.