13. Economic and technical efficiency in less favoured Slovenian areas

Author: Nicola Galluzzo


Slovenian farms are predominantly characterized by small utilized agricultural areas scattered in several rural villages. The poorer the endowment of land capital, the poorer the net farm income and technical and economic efficiency. To assess the economic impact of financial subsidies allocated by the Common Agricultural Policy (CAP) in the early 1960s the European Union established a specific survey carried out in a sample of European farms called Farm Accountancy Data Network (FADN). The purpose of this paper was to investigate in Slovenia farms part of the FADN dataset over the period 2004-2013, as well as the technical, allocative and economic efficiency using a quantitative approach throughout the Data Envelopment Analysis (DEA). The methodology for the efficiency analysis applied a non-parametric model such as DEA, capable of estimating in an input-oriented model the evolution of technical, allocative and cost efficiency in Slovenian farms over a ten-year period.
The FADN dataset has been stratified in function of the localization of farms both in underdeveloped rural areas and also in not disadvantaged rural areas, creating three different clusters: farms located in less-favoured areas, mountainous farms and not disadvantaged agricultural enterprises. Findings have pointed out a positive effect of the financial subsidies allocated to less favoured areas in implementing the level of efficiency in farms, corroborating the hypothesis, according to which farms located in underdeveloped rural areas are more efficient than enterprises located in not disadvantaged areas due to significantly deeply rooted family farms. Summing up, the European Union, by specific funds, should ameliorate the level of capital land which, linked to the skillful use of labour capital, is pivotal in improving the technical and economic efficiency.

Keywords: Farm Accountancy Data Network, rural development, disadvantaged rural areas, Slovenia