Assessment of production efficiency of intensive and traditional olive farms in southern Italy using data envelopment analysis

In Southern Italy, olive growing represents one of the most important sources of income and employment for rural economy. However, the profitability of many olive growing farms depends, even now, on public subsidies. The current changes in European Common Agricultural Policy (CAP) 2014-2020, oriented towards a decrease of the direct payments, will inevitably have important effects on farmer incomes. This is why the olive farms will have to increase their level of direct profitability to ensure their resilience on the market. Therefore, the measurement of technical efficiency plays a crucial role for identifying more efficient management practices, and for this aim, Data Envelopment Analysis (DEA) represents the most widely used technique in productivity analysis. This study aims at assessing the technical and scale efficiency of intensive and traditional olive farms in Southern Italy by applying constant and variable returns to scale input-oriented models, in order to highlight the performance of each farm. Results showed that technical efficiency in intensive olive farms is greater than traditional ones, although improvements in the input allocation among all farms are needed. The results highlight the importance of adopting farm management strategies in order to optimize the input use and achieve suitable levels of productive performance.