Determinants of technical efficiency of Slovenian farms

This article investigates the determinants of technical efficiency of Slovenian farms during the transition to a market economy and before accession to the European Union (1994-2003). Both the parametric stochastic frontier and the non-parametric data envelopment analysis (DEA) methods show that the degree of technical efficiency has increased during the transition, and that farm specialisation associated with technological change is found to be a crucial determinant for increasing technical efficiency. A negative impact of farm commercialisation on technical efficiency is found, explained by the specific nature of livestock farms, in particular, with intra-farm intermediary consumption. The use of hired labour has no significant influence, but mixed results are found for rented land. The results suggest possible sources of imperfections in farm input markets.