RESEARCH PAPER
HETEROGENEITY IN THE LEVEL OF TECHNICAL EFFICIENCY OF FARMS IN THE EUROPEAN UNION REGIONS AND ITS RELATIONSHIP TO INDEBTEDNESS
 
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Poznań University of Economics and Business
 
 
Submission date: 2024-07-02
 
 
Final review date: 2024-09-09
 
 
Acceptance date: 2025-01-09
 
 
Publication date: 2025-03-31
 
 
Corresponding author
Jakub Staniszewski   

Uniwersytet Ekonomiczny w Poznaniu
 
 
Zagadnienia Ekonomiki Rolnej / Problems of Agricultural Economics 2025;382(1):57-84
 
KEYWORDS
JEL CLASSIFICATION CODES
Q15
Q18
B52
 
TOPICS
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.
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