The aim of this study is to analyse the efficiency of Estonian grain farms after Estonia's transition to a market economy and during the accession period to the European Union (EU). The non-parametric method Data Envelopment Analysis (DEA) was used to estimate the total technical, pure technical and scale efficiency of Estonian grain farms in 2000-2004. Mean total technical efficiency varied from 0.70 to 0.78. Of the grain farms 62% are operating under increasing returns to scale. Solely based on the DEA model it is not possible to determine optimum farm scale and the range of Estonian farm sizes operating efficiently is extensive. The most pure technically efficient farms were the smallest and the largest but the productivity of small farms is low compared to larger farms because of their small scale. Therefore, they are the least competitive. Since pre-accession period to the EU, large input slacks of capital have replaced the former excessive use of labour and land. This raises the question about the effects on efficiency of the EU's investment support schemes in new member states.

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Abstract:The aim of the study was to analyze the productivity change of Estonian dairy farms before and after the accession to the European Union. The Malmquist productivity index was measured and separated into the technical and efficiency change using the data envelopment analysis for the pre-accession period (years 2001-2003) and the post-accession period (2004)(2005)(2006). Second-stage regression was applied to estimate the possible variables determining the productivity and efficiency change. Productivity growth of Estonian dairy farms was negative for both observed periods; the mean annual growth rate of the Malmquist productivity index was -0.7% in 2001-2003 and -2.6% in 2004-2006. The share of farms with declining productivity increased from 36% to 50% after the accession to the EU and is induced mainly by a significant deterioration in the efficiency change. remarkable changes in the line-up of most efficient dairy farms occurred between 2000 and 2006, producers with greater initial efficiency have experienced significant regress, with efficiency score decreasing from 0.842 in 2000 to 0.608 in 2006 and the new front-runners, forming the efficiency frontier, have emerged. capitalization was positively related with the cumulative technical change. nevertheless, increasing investments and assets have not affected efficiency change and investments have often not been harnessed in the best possible way.