Assessing technical efficiency of Chios sheep farms with data envelopment analysis

In this study the level of technical efficiency of 58 Chios sheep farms is estimated with the implementation of Data Envelopment Analysis. This level of technical efficiency is used as a classification criterion and the main technical and economic indices of the farms are analyzed in order to investigate their contribution to the improvement of technical efficiency. Next, the structural and economic characteristics of the farms that utilize the existing technology efficiently are described and compared with the average farm. The results show the presence of substantial inefficiencies in the allocation of the existing resources among farms that rear Chios sheep in Greece, which indicates that there is considerable room for development. The estimated mean level of technical efficiency is 0.76, suggesting that the average farm could increase its value of production by 24%, given the level of inputs and the existing production technology. Furthermore, larger farms are associated with higher levels of efficiency. A technical and economic description indicates that the efficient farms, compared to the average Chios breed farm, use less land and labor, rear a smaller number of ewes, utilize less variable and fixed capital and achieve a higher income in order to produce the same level of output.