Determinants of technical efficiency of crop and livestock farms in Poland

Poland is one of the candidate countries for European Union membership that is currently experiencing acute structural problems within agriculture. This study analyses technical efficiency and its determinants for a panel of individual farms in Poland specialised in crop and livestock production in 2000. Technical efficiency is estimated with stochastic frontier analysis (SFA) and confidence intervals are constructed. Determinants of inefficiency are also evaluated. The SFA results are compared with results using Data Envelopment Analysis (DEA). On average, livestock farms are more technically efficient than crop farms. For both specialisations, the size-efficiency relationship is positive i.e. large farms are more efficient. The SFA findings are generally supported by the DEA results. Soil quality and the degree of integration with downstream markets are highly important determinants of efficiency. The use of factor markets (land and labour) is important for crop farms, while livestock farms can rely on family labour and own land. Also, education is a constraint to efficiency particularly for crop farms.