Technical efficiency of the food and drink industry and its determinants

Zdeňka Náglová and Marie Šimpachová Pechrová
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Zdeňka Náglová: Department of Economics of Agriculture and Food Industry, Institute of Agricultural Economics and Information, Prague, Czech Republic
Marie Šimpachová Pechrová: Department of Modelling of Agricultural Policy, Institute of Agricultural Economics and Information, Prague, Czech Republic

Agricultural Economics, 2021, vol. 67, issue 10, 409-422

Abstract: This study focuses on evaluating the technical efficiency (TE) of food and drink companies in the Czech Republic and on finding its determinants. The analysis is based on the data of 597 firms and uses the stochastic frontier method. We have identified the key players in the market and the less effective groups of processors. Foreign-owned companies have a strong position because of a better economy, but the results showed that their efficiency is comparable with that of Czech-owned companies. The results helped confirm that the size of the company influences its TE. The lowest efficiency was observed in small companies. TE also differed among branches of the food industry. The highest efficiency was in the bakery and milk industries, and the lowest efficiency was in fruit and vegetable processing. Subsidised firms reached a significantly higher efficiency. With respect to economic results, there is still a need to improve competitiveness through investments.

Keywords: business; competitiveness; food processing; stochastic frontier analysis; subsidies; technical efficiency (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:caa:jnlage:v:67:y:2021:i:10:id:93-2021-agricecon

DOI: 10.17221/93/2021-AGRICECON

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