Membership in agricultural producer organizations and farm technical efficiency in Slovakia
DOI:
https://doi.org/10.24136/eq.2020.022Keywords:
farms, producer organizations, technical efficiency, metafrontier, RDP supportAbstract
Research background: EU National Rural Development Programs (RDPs) support food chain organization, including the establishment of agricultural producer organizations (APOs) to assist the cooperation among small- and medium-sized farms and improve their performance.
Purpose of the article: We assessed how membership in an APO affects technical efficiency in a sample of Slovak farms. We break down our results by the type of membership (non-members, long-term members, and members of newly established APOs, benefitting from the RDP support) and production specialization of farms (crops, livestock, unspecialized). We expected a positive effect of membership on farm performance, although with differences by production specialization.
Methods: We analyzed cross-sectional data of 645 farms in Slovakia in 2014, when the 2007?2013 RDP support was over. We applied a DEA-based two-stage metafrontier approach. During the first stage, we estimated group-specific efficiency and calculated adjusted (target) values of inputs, given the outputs. During the second stage, we estimated the meta-technical efficiency of farms relative to the metafrontier derived from pooled adjusted inputs and outputs of farm groups by their membership within production specialization. The meta-efficiency indicates farm efficiency associated with membership in a producer organization. We examined the differences between meta-efficiency by membership groups by the Kruskal-Wallis and post hoc Dunn?s tests.
Findings & Value added: Members of APOs were mainly large farms. Membership in newly established APOs, benefitting from of the RDP support, contributed significantly to higher technical efficiency of livestock and crop farms. Their performance was, however, affected by managerial and scale inefficiencies. Well-performing farms with good farm management had joined APOs already before the year 2007. However, the long-term APO membership did not improve farm technical efficiency significantly. Public support of farm cooperation should be designed to improve the governance, sustainability of the APO activities, and performance of their members.
Downloads
References
Abate, G. T, Francesconi, G. N., & Getnet, K. (2014). Impact of agricultural cooperatives on smallholders’ technical efficiency: empirical evidence from Ethiopia. Annals of Public and Cooperative Economics, 85(2). doi: 10.1111/apce. 12035.
DOI: https://doi.org/10.1111/apce.12035
View in Google Scholar
Alho, E. (2015). Farmers’ self-reported value of cooperative membership: evidence from heterogeneous business and organization structures. Agricultural and Food Economics, 3. doi: 10.1186/s40100-015-0041-6.
DOI: https://doi.org/10.1186/s40100-015-0041-6
View in Google Scholar
Arcas, N., García, D., & Guzmán, I. (2011). Effect of size on performance of Spanish agricultural cooperatives. Outlook on Agriculture, 40(3). doi: 10.5367/oa. 2011.0051.
DOI: https://doi.org/10.5367/oa.2011.0051
View in Google Scholar
Banaszak, I., & Beckmann, V. (2010). Compliance with rules and sanctions in producer groups in Poland. Journal of Rural Cooperation, 38(1). Retrieved from https://ageconsearch.umn.edu/record/163872/files/Banaszak%20jrc38-1_2010.pdf.
View in Google Scholar
Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management Science, 30(9). doi: 10.1287/mnsc.30.9.1078.
DOI: https://doi.org/10.1287/mnsc.30.9.1078
View in Google Scholar
Battese, G. E., & Rao, D. S. P. (2002), Technology gap, efficiency and a stochastic metafrontier function. International Journal of Business and Economics, 1(2).
View in Google Scholar
Battese, G. E., Rao, D. S. P., & OʼDonnell, C. J. (2004). A metafrontier production function for estimation of technical efficiencies and technology gaps for firms operating under different technologies. Journal of Productivity Analysis, 21. doi: 10.1023/B:PROD.0000012454.06094.29.
DOI: https://doi.org/10.1023/B:PROD.0000012454.06094.29
View in Google Scholar
Battese, G. E., Rao, D. S. P., & OʼDonnell, C. J. (2008). Metafrontier frameworks for the study of firm-level efficiencies and technology ratios. Empirical Economics, 34. doi: 10.1007/s00181-007-0119-4.
DOI: https://doi.org/10.1007/s00181-007-0119-4
View in Google Scholar
Bijman, J., Iliopoulos, C., Poppe, K., Gijselinckx, C., Hagedorn, K., Hanisch, M., Hendrikse, G. W. J., Kühl, R., Ollila, P., Pyykkönen, P., & Van Der Sangen, G. (2012). Support for farmers’ cooperatives. Report prepared for the European Commission. Wageningen UR. Retrieved from https://library.wur.nl/WebQu ery/wurpubs/fulltext/245008.
View in Google Scholar
Bojnec, Š., Fertő, I, Jámbor, A., & Tóth, J. (2014). Determinants of technical efficiency in agriculture in new EU Member States from Central and Eastern Europe. Acta Oeconomica, 64(2). doi: 10.1556/AOecon.64.2014.2.4.
DOI: https://doi.org/10.1556/aoecon.64.2014.2.4
View in Google Scholar
Brockett, P. L., & Golany, B. (1996) Using rank statistics for determining programmatic efficiency differences in data envelopment analysis. Management Science 42(3). doi: 10.1287/mnsc.42.3.466.
DOI: https://doi.org/10.1287/mnsc.42.3.466
View in Google Scholar
Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2. doi: 10.1016/0377-2217(78)90138-8.
DOI: https://doi.org/10.1016/0377-2217(78)90138-8
View in Google Scholar
Charnes, A., Cooper, W. W., & Rhodes, E. (1981). Evaluating program and managerial efficiency: an application of data envelopment analysis to program follow through. Management Science, 27(6). doi: 10.1287/mnsc.27.6.668.
DOI: https://doi.org/10.1287/mnsc.27.6.668
View in Google Scholar
Cechin, A., Bijman, J., Pascucci, S., & Omta, O. (2013). Decomposing the member relationship in agricultural cooperatives: implications for commitment. Agribusiness, 29(1). doi: 10.1002/agr.21321.
DOI: https://doi.org/10.1002/agr.21321
View in Google Scholar
Chlebicka, A., & Pietrzak, M. (2018). Size of membership and survival patterns of producers’ organizations in agriculture. Social aspects based on evidence from Poland. Sustainability, 10(7). doi: 10.3390/su10072293.
DOI: https://doi.org/10.3390/su10072293
View in Google Scholar
Cook, M. L. (1995). The future of US agricultural cooperatives: a neo-institutional approach. American Journal of Agricultural Economics, 77. doi: 10.2307/124 3338.
DOI: https://doi.org/10.2307/1243338
View in Google Scholar
Cook, M. L. (2018). A life cycle explanation of cooperative longevity. Sustainability, 10, 1586. doi: 10.3390/su10051586.
DOI: https://doi.org/10.3390/su10051586
View in Google Scholar
De Roest, K. Ferrari, P., & Knickel, K. (2018). Specialisation and economies of scale or diversification and economies of scope? Assessing different agricultural development pathways. Journal of Rural Studies, 59. doi: 10.1016/j.jrurstud. 2017.04.013.
DOI: https://doi.org/10.1016/j.jrurstud.2017.04.013
View in Google Scholar
Duvaleix-Tréguer, S., & Gaigné, C. (2015). Producer organizations and members performance in hog production. Paper presented at the Agricultural and Applied Economics Association and Western Agricultural Economics Association Annual Meeting, San Francisco, CA. doi: 10.22004/ag.econ.205494.
View in Google Scholar
Duvaleix-Tréguer, S. (2018). Producer organisations in the meat sector. The contribution of producer organisations to an efficient agri-food supply chain. Belgium: European Commission, Bruxelles.
View in Google Scholar
European Commission (2019a). Competition. https://ec.europa.eu/competition/ sectors/agriculture/overview_en.html
View in Google Scholar
European Commission (2019b). Study of the best ways for producer organisations to be formed, carry out their activities and be supported. Final Report. doi: 10.2762/034412.
View in Google Scholar
European Commission (2020a). Producer and interbranch organisations. https://ec.europa.eu/info/food-farming-fisheries/key-policies/common-agricultu ral-policy/market-measures/agri-food-supply-chain/producer-and-interbranch-o rganisations_en.
View in Google Scholar
European Commission (2020b). Factsheet on 2014-2020 Rural Development Programme for Slovakia.
View in Google Scholar
European Network for Rural Development (2017). Policy Framework. https://enrd.ec.europa.eu/policy-in-action/policy-framework.
View in Google Scholar
Fałkowski, J., & Ciaian, P. (2016). Factors supporting the development of producer organizations and their impacts in the light of ongoing changes in food supply chains. JRC Technical Report No. EUR 27929 EN, Joint Research Centre, European Commission. doi: 10.2791/21346.
View in Google Scholar
Ferrier, G. D., & Porter, P. K. (1991). The productive efficiency of US milk processing cooperatives, Journal of Agricultural Economics, 42(2). doi: 10.1111/j. 1477-9552.1991.tb00344.x.
DOI: https://doi.org/10.1111/j.1477-9552.1991.tb00344.x
View in Google Scholar
Giagnocavo, C., Galdeano-Gómez, E, & Pérez-Mesa, J. C. (2018). Cooperative longevity and sustainable development in a family farming system. Sustainability, 10(7). doi:10.3390/su10072198.
DOI: https://doi.org/10.3390/su10072198
View in Google Scholar
Guzmán, I., & Arcas, N. (2008). The usefulness of accounting information in the measurement of technical efficiency in agricultural cooperatives. Annals of Public and Cooperative Economics, 79(1). doi: 10.1111/j.1467-8292.2007. 00354.x.
DOI: https://doi.org/10.1111/j.1467-8292.2007.00354.x
View in Google Scholar
Hoken, H., & Su, Q. (2015). Measuring the effect of agricultural cooperatives on household income using PSM-DID: A case study of a rice-producing cooperative in China. Institute of Developing Economies, Japan External Trade Organization (JETRO). Retrieved from https://ideas.repec.org/p/jet/dpaper/dpa per539.html.
View in Google Scholar
IL MoA SR. (2018). Database information sheets of the Ministry of Agriculture and Rural Development of the Slovak Republics.
View in Google Scholar
Kotyza, P., Tomsik, K., Elisova, K., & Hornowski, A. (2018). Supporting producer groups–increasing producer’s value added? Scientia Agriculturae Bohemica, 49(2). doi: 10.2478/sab-2018-0020.
DOI: https://doi.org/10.2478/sab-2018-0020
View in Google Scholar
Kruskal, W. H., & Wallis, W. A. (1952). Use of ranks in one criterion variance analysis. Journal of the American Statistical Association, 47(260).
DOI: https://doi.org/10.1080/01621459.1952.10483441
View in Google Scholar
Lakner, S., Kirchweger, S. Hoop, D., Brümmer, B., & Kantelhardt, J. (2018). The effects of diversification activities on the technical efficiency of organic farms in Switzerland, Austria, and southern Germany. Sustainability, 10(4). doi: https://doi.org/10.3390/su10041304.
DOI: https://doi.org/10.3390/su10041304
View in Google Scholar
Matczak, P. (2012). Support for farmers` cooperatives; case study report: performance and sustainability of new emerging cooperatives in Poland. Wageningen: Wageningen UR. Retrieved from http://edepot.wur.nl/244933.
View in Google Scholar
Michalek, J., Ciaian, P., & Pokrivcak, J. (2018). The impact of producer organizations on farm performance: the case study of large farms from Slovakia. Food Policy, 75. doi: 10.1016/j.foodpol.2017.12.009.
DOI: https://doi.org/10.1016/j.foodpol.2017.12.009
View in Google Scholar
MoA SR. (2016). Ex post hodnotenie PRV SR 2007 – 2013. Final Report. Ministry of Agriculture and Rural Development of the Slovak Republic. Retrieved from http://www.mpsr.sk/index.php?navID=47&sID=43&navID2=318.
View in Google Scholar
Skevas, T., & Grashuis, J. (2019). Technical efficiency and spatial spillovers: Evidence from grain marketing cooperatives in the US Midwest. Agribusiness. 2019. doi: 10.1002/agr.21617.
DOI: https://doi.org/10.1002/agr.21617
View in Google Scholar
Ratinger, T., Trdlicova, K., Abrahamova, M., Boskova, I., Souckova, I., Novotý, P., & Baudisova, H. (2012). Support for farmer´s cooperatives. Country report the Czech Republic. Retrieved from http://edepot.wur.nl/244817.
View in Google Scholar
Ribašauskiene, E., Šumyle, D., Volkov, A. Baležentis, T, Streimikiene, D., & Morkunas, M. (2019). Evaluating public policy support for agricultural cooperatives. Sustainability, 11(3769). doi: 10.3390/su11143769.
DOI: https://doi.org/10.3390/su11143769
View in Google Scholar
Simpson, G. (2007). A cautionary note on methods of comparing programmatic efficiency between two or more groups of DMUs in data envelopment analysis. Journal of Productivity Analysis, 28. doi: 10.1007/s11123-007-0041-y.
DOI: https://doi.org/10.1007/s11123-007-0041-y
View in Google Scholar
Soboh, R. A. M. E., Lansink, A. O., Giesen, G., & Van Dijk, G. (2009). Performance measurement of the agricultural marketing cooperatives: the gap between theory and practice. Applied Economic Perspectives and Policy, 31(3). doi: 10.1111/j.1467-9353.2009.01448.x.
DOI: https://doi.org/10.1111/j.1467-9353.2009.01448.x
View in Google Scholar
Sueyoshi, T., & Aoki, S. (2001). A use of a nonparametric statistic for DEA frontier shift: the Kruskal and Wallis rank test. Omega. 29(1). doi: 10.1016/S0305-0483(00)00024-4.
DOI: https://doi.org/10.1016/S0305-0483(00)00024-4
View in Google Scholar
Van Herck, K. (2014) Assessing efficiencies generated by agricultural Producer Organisations. Brussels: European Commission. doi: 10.2763/76733.
View in Google Scholar
Velázquez, B., & Buffaria, B. (2017). About farmers’ bargaining power within the new CAP. Agricultural and Food Economics, 5(16). doi: 10.1186/s40100-017-0084-y.
DOI: https://doi.org/10.1186/s40100-017-0084-y
View in Google Scholar
Zhu, X., & Lansink, A. O. (2010). Impact of CAP subsidies on technical efficiency of crop farms in Germany, the Netherlands and Sweden. Journal of Agricultural Economics, 61(3). doi: 10.1111/j.1477-9552.2010.00254.x.
DOI: https://doi.org/10.1111/j.1477-9552.2010.00254.x
View in Google Scholar
