Technical Efficiency of Estonian Grain Farms in 2000-2006

The aim of this research was to calculate the efficiency of Estonian grain farms to determine the factors that contributed to efficiency. The non-parametric method Data Envelopment Analysis (DEA) was used to estimate the efficiency of Estonian grain farms in 2000-2006. DEA uses mathematical programming to produce a linear best practice frontier over the data and then calculates efficiency measures relative to this frontier. The technical efficiency was calculated for individual farms which use similar inputs and produce the same product (cereals and oilseeds producers). The Farm Accounting Data Network (FADN) data were used to analyse the grain sector in Estonia. The analysis demonstrated that producers should not benchmark to the highest level of production, but rather should combine resources in land, labour and costs to achieve an efficient level of production, which indeed may be less than the maximum production level of the group.