Technical efficiency for cereal production in European Union

Date

2022-05

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Abstract

In recent years, the European Union has endeavored to control the quality of agricultural goods by emphasizing either the physical features of the items and the region in which they are produced or the techniques and procedures used to make agricultural cereal products (Dimara et al., 2005). In this dissertation, the technical efficiency of cereal products is estimated across European countries and crops by estimating a stochastic frontier production function for the crop years 2008–2018. Furthermore, this study explains the technical efficiency scores variation across crops and countries by using macroeconomic variables and agricultural policies such as subsidies. The results show that in terms of barley crop technical efficiency across European Union countries under half-normal, exponential, and truncated-normal, the United Kingdom has the highest level of efficiency with 0.98, 0.99, and 0.95, respectively. On the other hand, Finland has the lowest efficiency level at 0.65, 0.71, and 0.55 under half-normal, exponential, and truncated-normal distributions. Furthermore, France has the highest technical efficiency across all distributions for common wheat, while Greece has the lowest. Moreover, France has efficiency ratings of 1, 0.95, and 0.99 under half-normal, exponential, and truncated-normal distributions. On the other hand, Greece has an efficiency score of 0.56 under half-normal distribution, 0.57 under the exponential distribution, and 0.49 under truncated-normal distribution. Finally, for grain maize, France has the highest technical efficiency across all distributions and countries with 0.99 under half-normal and 0.96 under exponential and truncated-normal distributions. In contrast, Romania has the lowest technical efficiency of 0.48, 0.48, and 0.44 under half-normal, exponential, and truncated-normal distributions. Furthermore, the results show that barley's technical efficiency score estimates vary from 0.803 under the half truncated normal to 0.835 under the exponential distribution with 0.812 for the half-normal. For wheat, with an average technical efficiency score of 0.855 under the half-normal distribution, 0.843 under the exponential distribution, and 0.825 under the truncated normal distribution. However, technical efficiency scores for maize show the lowest values with scores of 0.716, 0.774, and 0.755 under half-normal, exponential, and truncated normal distributions. Finally, the results provide the influence of various macroeconomic and subsidy variables on the overall technical efficiency of barley, common wheat, and grain maize production across distributions. For barley, female wages, foreign direct investment, total population, agricultural land as a percentage of total land, female agricultural employment, and the total labor force have a statistically significant positive effect on the total technical efficiency of barley production. However, forest area (as a percentage of total land area), other subsidies, wages for males, total unemployment rate, female employment in industry, male employment in agriculture, exports of goods and services as a percentage of GDP, urban population, and total crop subsidies all have a statistically significant negative effect on the technical efficiency of barley production. Additionally, for common wheat, Total direct payments, total population, wages for females, agricultural employment for females, and agricultural land as a percentage of total land, wages for males, annual population growth, and total direct payments, forest area as a percentage of total land area, all have a statistically significant positive influence on the overall technical efficiency of wheat production. However, total labor force, urban population, employment in the industry for males, employment in agriculture for males, total unemployment rate, other subsidies, industry value-added as a percentage of GDP, total subsidies on livestock, and total labor force all have a statistically significant negative effect on wheat production's technical efficiency Additionally, employment in the industry for males, employment in agriculture for males, employment in industry for females, and wages for males all have a statistically significant positive effect on the overall technical efficiency of grain maize production. However, employment in the industry for females, the wage for females, agricultural land as parentage of total land, and GDP annual growth all have a statistically significant negative effect on the technical efficiency of grain maize production.


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Keywords

Technical Efficiency, Stochastic Frontier Analysis, Random Forest Regression, Random Effect, Data Envelopment Analysis

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