The paper deals with the sources of competitiveness of Czech cereal production by considering precision farming technology and employing micro-level data collected in the FADN database for the period ...2005–2018. The analysis is based on the stochastic frontier modelling of an input distance function in the specification of the four-component model, which currently represents the most advanced approach to technical efficiency analysis. To provide a robust estimate of the model, the paper employs methods which control for the potential endogeneity of netputs in the four-step estimation procedure. Furthermore, the total factor productivity change is calculated using the Törnqvist-Theil index. The results reveal that Czech cereal producers took great advantage of their production possibilities and experienced technological progress, which contributed considerably to productivity dynamics and consequently to an increase in their competitiveness. Precision farming, which is associated with a large number of innovations reflected in technological change and optimal resource use, contributed to higher technical efficiency connected with cost savings in Czech cereal production.
The paper provides findings on the technical efficiency of the European dairy processing industry, which is one of the most important subsectors of the food processing industry in the European Union ...(EU). The ability to efficiently use inputs in the production of outputs is a prerequisite for the sustainability and competitiveness of the agri-food sector as well as for food security. Thus, the aim of this paper is to provide a robust estimate of technical efficiency by employing new advances in productivity and efficiency analysis, and to investigate the efficiency of input use in 10 selected European countries. The analysis is based on two-stage stochastic frontier modelling incorporating country-specific input distance function (IDF) estimates and a meta-frontier input distance function estimate, both in specification of the four-component model, which currently represents the most advanced approach to technical efficiency analysis. To provide a robust estimate of these models, the paper employs methods that control for the potential endogeneity of netputs in the multi-step estimation procedure. The results, based on the Amadeus dataset, reveal that companies manufacturing dairy products greatly exploited their production possibilities in 2006–2018. The dairy processing industry in the analysed countries cannot generally be characterized by a considerable waste of resources. The potential cost reduction is estimated at 4–8%, evaluated on the country samples mean. The overall technical inefficiency (OTE) is mainly a result of short-term shocks and unsystematic failures. However, the meta-frontier estimates also reveal a certain degree of systematic failure, e.g., permanent managerial failures and structural problems in European dairy processing industry.
Analyses of spatial market integration contributes to the knowledge about market efficiency and provides information to policymakers, as the spatial integration of markets contributes to ...competitiveness and economic development. Although the integration of agri-food markets is widely discussed in the economic literature, research on the dairy sector is relatively limited. This paper fulfils the research gap with an in-depth investigation of spatial milk and dairy product market integration between two neighboring countries-Poland and Czechia-using regional data, and including both production and processing levels. The econometric analysis of time series covering the period 2001-2021 reveals that only long-run milk and skimmed milk powder (SMP) price relationships are between the Czech Republic and Poland. The results of the study confirm that the factors influencing spatial price relationships between the Czech Republic and Poland are: strong trade ties, the common moment of accession to the EU, a close distance between markets, and region specialization.
This paper deals with the estimation of technical efficiency of milk production in the EU, its decomposition and the analysis of determinants of transient and persistent efficiency. Attention was ...focused on specialized milk production using FADN data in the period from 2004 to 2017. The analysis is based on the four-component model that represents the most advanced approach to technical efficiency analysis at present and the multi-step estimation procedure extended by technical efficiency determinants. To the best of our knowledge, this is the first application of this model based on the multi-step estimation with the inclusion of technical efficiency determinants on this type of specialization in the EU. The results show that the overall technical efficiency achieves the mean value of 68% and is relatively dense around the mean. The persistent inefficiency poses a greater problem for dairy production and varies considerably across European regions compared to the transient part. Based on the assessment of the development of transient efficiency, it is evident that it is influenced by the situation on the dairy market, in particular by the milk crises. The most effective conversion of inputs to outputs is achieved in the Netherlands, the United Kingdom, and Belgium and is least burdened with institutional and structural rigidities. The results show that transient efficiency is positively influenced by paid labour share, rented land share, level of modernization and level of off-farm activities and negatively by the level of subsidies on livestock. The positive effect of the economies of size on persistent efficiency is not proved. However, specialization, despite the higher vulnerability of specialized farms to price shocks, affects persistent efficiency positively. Localization of farms in LFAs, as expected, has a negative impact on persistent technical efficiency.
This study evaluated productivity dynamics and identified sources of productivity growth in Italian tomato production and processing. We used a stochastic frontier input distance function with four ...error components—heterogeneity, statistical noise, persistent and transient inefficiency—and a four-step estimation procedure with a system generalized method of moments (GMM) estimator in the first step to address the endogeneity problem. The results reveal significant differences in the productivity and efficiency of tomato production and processing. Moreover, there are considerable differences among the different sizes of tomato producers, with the main variations observed for scale efficiency. While tomato processors operate at an optimal production size, tomato producers are characterized by considerable economies of scale, especially small producers. These results thus suggest that there is significant opportunity for technical efficiency improvements at both stages of the value chain. Finally, due to improvements made to scale efficiency, extensive productivity growth was observed for the group of small tomato producers.
The aim of the paper is to evaluate the development and main characteristics of Czech milk production productivity and to compare Czech development with the situation in the European Union. From a ...methodological point of view, a parametric approach in the form of stochastic frontier analysis was applied, the input distance function was estimated, and total factor productivity was examined. The analysis used an unbalanced panel data set, which describes TF14-45 specialist milk production from 27 member states of the European Union in the period 2004-2016 collected in the FADN database. The results showed that in the Czech Republic, the average value of technical efficiency was 94.01% during the analysed time period. Compared to EU member states, this figure was above the EU-13 average (93.71%). Czech milk production in the analysed period and the milk production of almost all other EU countries was characterized by increasing returns to scale. Examination of total factor productivity (TFP) showed that the scale effect and technical efficiency change effect can be considered the main components of TFP changes in Czech milk production. However, the scale effect was more significant in EU-15 countries than the Czech milk sector.
This study examines the impact of agricultural support on crop diversity measured by a diversity index. Our results indicate that agricultural subsidies have a limited effect on agricultural ...biodiversity. By using unique farm-level data, we show that subsidies support the income of farmers rather than the agricultural biodiversity. The results are robust regarding the size, practice management and altitude of the agricultural holdings' operations and various measures of agricultural biodiversity. However, when interpreting the results, the limitations of biodiversity indices should be considered.
This paper deals with the sources of total factor productivity (TFP), namely technical efficiency, scale efficiency, and technological change, considering the size of agricultural producers and using ...balanced panel data in the period 2014–2018 drawn from the Farm Accountancy Data Network (FADN) database for three sectors of Czech agriculture – cereals, milk, and beef. The investigation is based on the stochastic frontier (SF) modelling of an input distance function (IDF) with four error components (heterogeneity, statistical noise, persistent and transient inefficiency). The sector-specific models are estimated by a four-step estimating procedure with a system generalised method of moments (GMM) estimator to address the endogeneity problem. The results reveal inter- and intra-sectoral differences in productivity drivers. In particular, the smallest producers lag considerably behind the largest ones due to the scale effect (SEC). While large farms should focus on technological change, improvements in scale and technical efficiency have been identified as the main sources of coping with productivity losses for small farmers.
This paper is focused on the investigation of the competitiveness drivers, namely technical and scale efficiency and technological change, and their relation to the profitability of the Czech food ...processing companies in the period 2016-2019. This investigation is based on the stochastic frontier modelling of an input distance function in the specification of the four-error-component model. The model is estimated with a multi-step procedure employing the generalized method of moments estimator addressing the potential endogeneity of netputs, and panel data gained from the Bisnode Albertina database. The results revealed (evaluated on the sample mean) that investigated food processing sectors were scale efficient in the analysed period, however, their production technologies exhibited prevailing technological regress. Moreover, the room for almost 17% cost reduction by the technical efficiency improvements was found out in all investigated sectors. Although inter-sectoral differences exist in the scale efficiency, technological change and technical efficiency dynamics, to increase the productivity and competitiveness of food processing companies, it is generally appropriate to focus on technical efficiency and technological change improvements. Both these competitiveness drivers connected with the cost reduction and minimizing of wastage of inputs are achievable through innovations. In general, the basic source of their financing is profit, the achievement of which is supported by cost minimization. However, it was found that sub-sectors, which are linked to sensitive sectors of agricultural production - that means sectors with the lowest national self-sufficiency, the highest level of imports and thus strong cost reduction pressure - have problem to translate the ability to produce efficiently into profitability. Although these food sectors, which have been also facing strong competition for a tong time, which leads to significant pressure to reduce costs, achieved the highest technical efficiency, their profitability was lowest from the investigated sectors.
This article attempts to identify the main reason for the profitability of Czech food processing companies. For this purpose, an analysis of the profitability of the food industry was carried out in ...the framework of the Structure–Conduct–Performance (SCP) paradigm; specifically, the relative market power (RMP) hypothesis versus the efficiency hypothesis was tested. The analysis used data at the micro-economic level of six Nomenclature of Economic Activities (NACE) sub-sectors of the Czech food processing industry in the period 2016–2020. The final dataset consisted of 2639 observations of 623 companies. The data came from the database of Bisnode Albertina and the Czech Statistical Office. Stochastic frontier analysis (SFA) and a regression model were used in the study. Based on the research carried out, performance does not seem to be explained by a greater market power represented by a firm’s market share. Only one sub-sector was proven to have a higher marginal effect of market power on profitability than technical efficiency. Thus, it can be concluded that companies with relatively larger market shares do not have greater market power and thus do not achieve higher profitability.
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