Some Theoretical and Practical Aspects of Technical Efficiency—The Example of European Union Agriculture

Abstract

The main objective of this article is to better understand the category of technical efficiency of agriculture. To achieve this goal, empirical research was carried out, the subject of which was to estimate the average technical efficiency of agriculture in the European Union in the years 2004–2020. The technical efficiency of agriculture was estimated using the Data Envelopment Analysis method–Cooper Rhodes Input Oriented model. In order to estimate the level of technical efficiency, the value of Total output was adopted as the output, and the following inputs were adopted: Total Utilized Agricultural Area, Fertilizers, Plant protection products, Total livestock units, Feed for grazing animals, Labor inputs, Machinery and equipment, and Gross expenditure on fixed assets. The conclusions from the literature review indicate that technical efficiency is the main determinant of economic efficiency. The conclusions from empirical research have shown that agriculture in the European Union is characterized by a high level of technical efficiency for 2004–2020, TE = 90.24%. Moreover, the technical efficiency of farms was checked according to classes of economic size. The obtained results only partially confirm that the increase in the economic size of a farm increases its technical efficiency, because the highest level of technical efficiency is characteristic of farms that belong to the classes very small and very large.