Regional Differences in the Slovak Dairy Farm Performance

Abstract

Milk sector in Slovakia significantly contributes to the domestic agricultural production in terms of value. In the paper we analysed regional differences in productivity and efficiency of dairy farms in Slovakia with regard to pooled sample technological frontier as well as with regard to particular regional frontiers over period 2004-2008. Technical efficiency and productivity changes were expressed by the Malmquist indices and estimated by non-parametric DEA. We used balanced panel FADN data of 106 dairy farms with prevailing dairy production. Dairy farms in all regions showed technical inefficiency, ranging from 11% in Western Slovakia (WS) to 23% in Eastern Slovakia. Western Slovakia dairy farms were the most efficient, with the highest level of technical efficiency and higher homogeneity of the farm performance. Differences in total technical efficiency, calculated with regard to both, the common and particular region frontier, result from differences in managerial efficiency rather than from differences in scale efficiency. We found only minor total factor productivity (TFP) improvement over the observed period. The highest average yearly productivity growth was observed in 2007 when the new programming period of RDP started and direct payments per livestock unit were introduced. The TFP growth resulted more from technological progress than from technical efficiency improvement and this technical efficiency change was driven mainly by managerial efficiency improvement. The highest TFP growth achieved Western and Eastern Slovakian farms, while the highest managerial efficiency improvement reached farms in Eastern Slovakia. Our findings suggest that policies designed to support improvement of efficiency of the Slovak dairy farm would have been desired.