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Multi-directional program efficiency: the case of Lithuanian family farms

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Abstract

The present paper analyses both managerial and program efficiencies of Lithuanian family farms, in the tradition of Charnes et al. (Manag Sci 27(6):668–697, 1981) but with the important difference that multi-directional efficiency analysis rather than the traditional data envelopment analysis approach is used to estimate efficiency. This enables a consideration of input-specific efficiencies. The study shows clear differences between the efficiency scores on the different inputs as well as between the farm types of crop, livestock and mixed farms respectively. We furthermore find that crop farms have the highest program efficiency, but the lowest managerial efficiency and that the mixed farms have the lowest program efficiency (yet not the highest managerial efficiency).

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Notes

  1. An alternative approach would rely on a Malmquist index analysis, which has not yet been defined for MEA and consequently is outside the scope of the current paper.

  2. Note that our study employs these commonly used variables expressed in the real monetary terms rather than physical quantities. This is done in order to ensure that all the variables represent flows rather than stocks. In addition, this allows aggregating inputs which, in turn, enables us to graphically illustrate the underlying isoquants.

  3. It should be noted that there was a steep decrease in the investment goods index between 2009 and 2010, causing an increase in the depreciation expressed in real terms. To check the robustness of the results, we therefore also tried to use only the consumer price index for all the variables within the model. The results turned out to be very similar in structure.

  4. For data on product-mix among Lithuanian family farms, please consult Table 8 in Lithuanian Institute of Agrarian Economics (2012).

  5. As pointed out by a reviewer, an alternative test for comparing DEA-based efficiency scores is provided by Simar and Zelenyuk (2006) based on the test of Li (1996, 1999). Applying Algorithm 1 from Simar and Zelenyuk (2006) with 1000 bootstrap replications was, however, not useful in practice given the size of our data set with over 10,000 observations, since the calculations for a single equality test took more than 24 h on an Intel Core i5 3.2 GHz with 4 Gb RAM.

  6. One might expect an increase in efficiency once the adjustments required by certain support measures are fully met by the farmers.

  7. For instance, the smallest farms (<10 ha) received 0.74 Lt per liter of milk, whereas the largest ones (over 150 ha) received 1.08 Lt per liter in 2011. For these data, please see Table 5 in Lithuanian Institute of Agrarian Economics (2012).

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Authors and Affiliations

  1. Department of Food and Resource Economics, University of Copenhagen, Rolighedsvej 25, 1958, Frederiksberg C, Denmark

    Mette Asmild & Jens Leth Hougaard

  2. Lithuanian Institute of Agrarian Economics, V. Kudirkos Str. 18, 03105, Vilnius, Lithuania

    Tomas Baležentis

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  1. Mette Asmild
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  2. Tomas Baležentis
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  3. Jens Leth Hougaard
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Correspondence to Tomas Baležentis.

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Asmild, M., Baležentis, T. & Hougaard, J.L. Multi-directional program efficiency: the case of Lithuanian family farms. J Prod Anal 45, 23–33 (2016). https://doi.org/10.1007/s11123-014-0419-6

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