Heterogeneity in the Level of Technical Efficiency of Farms in the European Union Regions and its Relationship to Indebtedness

Staniszewski Jakub ()
Additional contact information
Staniszewski Jakub: PhD, Institute of Economics, Poznań University of Economics and Business; Al. Niepodległości 10, 61-875 Poznań, Poland

Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics, 2025, vol. 382, issue 1, 57-84

Abstract: Aim The purpose of the study is to determine the relationship between the level of farm indebtedness and their technical efficiency. Material and Methods In the paper Greene’s “true” fixed effects model and regional Farm Accountancy Data Network data are used to calculate efficiency and its determinants in the stochastic frontier analysis framework. Results The results indicate that higher dependence on external capital deteriorates technical efficiency level. The existence of increasing returns to scale in the EU agriculture and important role of structural factors (region-specific heterogeneity) is proven as well. The latter disturbs the traditional division between ‘new’ and ‘old’ Member States in terms of agricultural production efficiency. Conclusions Assuming that debt increases as a consequence of the investments, the results may indicate overinvestment. It may be caused by the ease of obtaining loans on preferential terms or by the need to finance green investments which do not translate into production growth. This conclusion reveals the need to better address credit-based support instruments. On the other hand, investments, in particular those of innovative nature, may disturb standard production process and increase efficiency only in the long run.

Keywords: production efficiency; farm indebtedness; stochastic frontier analysis; FADN (search for similar items in EconPapers)
JEL-codes: B52 Q15 Q18 (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.30858/zer/199953 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:vrs:zerpae:v:382:y:2025:i:1:p:57-84:n:1005

DOI: 10.30858/zer/199953

Access Statistics for this article

Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics is currently edited by Sylwia Łaba

More articles in Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics from Sciendo
Bibliographic data for series maintained by Peter Golla ().