A multi-criteria assessment of relative farming efficiency in the European Union Member States

Abstract

The assessment of economic sector efficiency is of high importance when making strategic decisions at any management level. This study, hence, is aimed at proposing a new framework for multi-criteria assessment and comparison of farming efficiency. In order to achieve this aim, statistical analysis, the multi-criteria decision-making method MULTIMOORA, and data envelopment analysis were employed. Farming efficiency was evaluated across the EU Member States on the basis of data from the Farm Accountancy Data Network. The proposed indicator system covers the three ratios, which virtually describe the other six input or output indicators. The EU Member States were ranked according to the indicator system by the MULTIMOORA method. The application of DEA enabled to identify the main factors of inefficiency. Attention was focused on the three Baltic States and Poland. The analysis suggests that farming efficiency in these states is below the EU average. More specifically, land productivity should be increased in the Baltic States. Moreover, the increased crop output would enable to achieve the efficiency frontier. The future challenges for the agricultural development of the Baltic States are discussed in the paper. Keywords: farming efficiency, multi-criteria decision making, data envelopment analysis, strategic management