Determinants of Technical efficiency of Swedish Beef Farms : a Stochastic Frontier Analysis

University essay from SLU/Dept. of Economics

Abstract: This thesis presents an estimation of the farm level technical efficiency of Swedish farmers specialized in beef cattle production. The aim is to estimate a score between 0 and 1 which illustrates how efficient the Swedish beef farmers are given the technical assets available. The sample consists of 1200 observations on 296 farms between 2010 and 2016, and the data is collected from farm accountancy data from the EU FADN dataset. A stochastic Frontier Analysis was made to determine the benchmark of the sample efficiency and the sample mean technical efficiency could then be estimated to 0.64. The results also indicates that conventional farming, older age, availability to grazing area, location of the farm and high levels of support payments are determinants of efficiency. A negative correlation between the Stochastic Frontier and time was determined, indicating that efficiency has decreased for beef farms over the time period. Evidence has been found in the literature pointing at the importance of beef production for biodiversity, rural development, economic markets, and the possibility to influence production methods. Thus, the recommendations made in this thesis is for policy makers to understand the drivers of efficiency and to support the factors that improve efficiency to maintain the domestic production of meat. Keywords: stochastic frontier analysis, technical efficiency, Swedish beef farming, FADN

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