Assessing and Explaining the Efficiency of Extensive Olive Oil Farmers: The Case of Pelion Peninsula in Greece

The production of olives and olive oil in the Mediterranean region is one of the most important cultivations. The continuous changes imposed by the European Common Agricultural Policy (CAP) towards strengthening the influence of market forces have increased the necessity for the assessment of the efficiency of production protocols or patterns being implemented by the farmers. As regards olive trees cultivation, the efficiency of inputs utilization has not been studied in depth, despite the fact that this is a critical issue for both farmers and consumers. This study evaluates the efficiency rates of 100 Greek agricultural holdings specialized on olive trees cultivation by implementing a Data Envelopment Analysis (DEA) input oriented model. The inputs being used are land, fertilizers, agrochemicals, labour, and energy. The output being used is the revenue of each holding. The results quantify the significant variations of efficiency scores, providing evidence that there is space for restructuring the production process, in order to improve efficiency and thus decrease the production cost of inefficient farmers.