Technical efficiency assessment of intensive and traditional olive farms in Southern Italy

Abstract

Olive-growing plays an important role in Southern Italy's agricultural sector. However, the profitability of many olive growing farms depends, still today, on public subsidies. The current changes in the European Common Agricultural Policy (CAP) 2014-2020, oriented towards the direct payments decreasing, will inevitably have important effects on farmer incomes. This is why the olive farms will have to increase their level of direct profitability to ensure their resilience on the market. Therefore, the measurement of technical efficiency plays a crucial role in identifying more efficient management practices, and for this aim, Data Envelopment Analysis (DEA) represents the most widely used technique in productivity analysis. In this paper, constant returns to scale and variable returns to scale input-oriented models were used to investigate the technical and scale efficiency of intensive and traditional olive farms in Southern Italy, in order to highlight the performance of each farm. Results showed technical inefficiencies in both olive systems and, suggesting that improvements in the input allocation among all farms are needed. Findings could be useful to suggest the adoption of management strategies to optimize the use of inputs, aiming to achieve suitable levels of productive performance.