A microeconomic approach for agricultural development: a DEA application to Greek sheep farms
2007
Theocharopoulos, Athanasios | Melfou, Katerina | Papanagiotou, Evangelos
This paper explores the potential for increased profitability and improved farm income for sheep farms in Greece, as a result of the reorganization of farm input use.The method applied for the microeconomic analysis is DEA using data from the Greek (FADN) Network for the period 20002002. Results show that given the existing technology, the majority of farms exhibit technical inefficiency and can reduce inputs by more than 25% in the short run and by more than 40% in the long run, while maintaining the same level of output. Following there organization of inputs, sheep farms become profitable (32 /ewe) without even making any size adjustments. Farm income also increases by 28% in the short run and by 38% in the long run. Given that most of the farms operate with increasing returns to scale, they need to enlarge their size to achieve lower production costs. If they make these scale adjustments, profitability and farm incomes increase even more which is conducive to agricultural development.
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