Technical indicators of economic performance in dairy sheep farming

Abstract

In this study, the level of technical efficiency of 58 sheep farms rearing the Chios breed in Greece was measured through the application of the stochastic frontier analysis method. A Translog stochastic frontier production function was estimated using farm accounting data of Chios sheep farms and the impact of various socio-demographic and biophysical factors on the estimated efficiency of the farms was evaluated. The farms were classified into efficiency groups on the basis of the estimated level of efficiency and a technical and economic descriptive analysis was applied in order to illustrate an indicative picture of their structure and productivity. The results of the stochastic frontier model indicate that there are substantial production inefficiencies among the Chios sheep farms and that these farms could increase their production through the improvement of technical efficiency, whereas the results of the inefficiency effects model reveal that the farm-specific explanatory factors can partly explain the observed efficiency differentials. The measurement of technical inefficiency and the detection of its determinants can be used to form the basis of policy recommendations that could contribute to the development of the sector.

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