The assessment of technical efficiency (TE) provides information to managers and to policy makers about differences in performance among production units and the potential for improvements. Economic research on this important topic has evolved largely around two alternative approaches, namely, the parametric and the nonparametric. The first allows for random noise and, as a consequence, for some observations to lie outside the production set while the second assumes that all observations belong to the production set with probability equal to 1. The parametric models require restrictions on the shape of the production frontier (benchmark) and on the underlying data generation process (e.g. Stevenson, 1980;Battese & Coelli, 1988). Therefore, they lack robustness in cases where the functional forms of the frontier and/or the error structure are not correctly specified. The estimation of nonparametric frontier models has been, until recently, pursued through envelopment techniques such as the Data Envelopment Analysis (DEA) (Charnes et al., 1978) and the Free Disposal Hull (FDH) (Deprins et al., 1984) that are quite appealing since they rely on very few assumptions. They are, however, by construction quite sensitive to outliers or to extreme values. This is certainly an important problem when one is interested in assessing TE of production units in economic activities where the amount of output is subject to random shocks. In farming, for example, the level of realized output can be quite different from the planned one because of weather conditions and pest attacks.During the last decade considerable research effort has been devoted to the development of robust nonparametric efficiency estimators. Cazals et al. (2002)
AbstractThe assessment of technical efficiency in the agricultural sector and the influence of exogenous (environmental) variables on the production process has been a major topic of economic research especially for managers and policy makers. The methological innovation of the present study involves the impact of environmental variables on efficiency and the utilization of panel data for the empirical analysis. This has been pursued using full nonparametric robust frontier techniques (the alpha-quantile estimator) and a panel data set of olive growing farms in Greece from the Farm Accountancy Data Network of the EU. According to the empirical results, the ratio of owned to total land, the ratio of family to total labor, the degree of specialization, and a farm's location have a statistically significant impact on performance, which is not constant but varies over the 2006 to 2009 period considered.