The Impact of Data Envelopment Analysis on Effective Management of Inputs: The Case of Farms Located in the Regional Unit of Pieria

Abstract

Technical efficiency is considered a useful advisory tool for managers whose main goal is to maximize profit and minimize costs. Data envelopment analysis is a widely accepted methodology for technical efficiency estimation in the sector of agriculture. For that reason and with the view to extract useful conclusions regarding farmers’ effective management of inputs, this study aims to present the DEA method through its implementation in a set of farms located in the regional unit of Pieria. To conduct this analysis, relevant data were collected through a survey in which 40 farms participated. The output variable was chosen to be each farm’s total amount of sales, while the inputs were selected in a way to represent the main factors of production, such as (1) land in acres, (2) labor in hours, and (3) variable costs in EUR. The results showed that the examined farms need to reduce the inputs used by 34.6% to operate more efficiently from the point of view of the CRS model. Therefore, farmers should be motivated to reduce the inputs used, something that can be done through the provision of specialized advisory services. This will, of course, be helped by both the local authorities and the policies of the country in which the rational use of inputs seems to be necessary. This study may contribute to the relevant literature, agriculture, and the area since management suggestions are formulated for the farmers of Pieria’s regional unit.

Keywords

• technical efficiency
• data envelopment analysis
• farm management
• agriculture
• Pieria
• Greece