Modelling technical efficiency of horticulture farming in Kosovo: An application of data envelopment analysis

From Firenze University Press Journal: Bio-based and Applied Economics (BAE)

University of Florence
4 min readFeb 22, 2024

Nol Krasniqi, CESAER, INRAE, L’Institut Agro Dijon, Université Bourgogne

Stephane Blancard, CESAER, INRAE, L’Institut Agro Dijon, Université Bourgogne Franche-Comté

Ekrem Gjokaj, Faculty of Life and Environmental Sciences, University “Ukshin Hoti”

Giovanna Ottaviani Aalmo, Department of Economy and Society, Norwegian Institute of Bio-economy Research

A future integration for Kosovo to the European Union (EU) raises significant opportunities but also challenges for the country’s economy. One challenge is to improve the competitiveness of several sectors, including agriculture. According to latest agriculture census, Kosovo has 1.1 million hectares of land, out of which 53% is agri-cultural land (from which 54.3% belongs to permanent grasslands, 43.6% arable land, 1.9% permanent crops and 0.3% kitchen garden), 41% is forest, and 6% belongs to other land uses (KAS, Agriculture Census, 2015). Kosovo has traditionally supported with direct payment (subsidies) and through investment grants three main agricultural sectors: cereals, horticulture, and livestock, which are divided into 21 subsectors: 11 annual and per-ennial crops (cereals and horticulture), wine, and organ-ic products, and 10 livestock sectors and milk (Kostov et al. 2020).In Kosovo, the agriculture sector employs the high-est number of people, accounting for 34% of the total employment. This sector also makes a significant contri-bution to the country’s Gross Domestic Product, which was around 8% in 2019. Additionally, agricultural prod-ucts constitute 17% of the total export value (MAFRD, 2020). Although, 60% of the population lives in rural areas in Kosovo, they do not contribute much to eco-nomic growth. According to the Kosovo Ministry of Agriculture, Forestry and Rural Development (MAFRD), “only a limited number of farms are currently able to compete and grab a greater share of the EU and foreign market”. The low competitiveness of farms can be attrib-uted to several key structural factors, including the small size of most farms, land fragmentation, outdated build-ing and equipment design, and limited access to finan-cial resources (MAFRD, 2014). Furthemore, Kosovo con-tinues to have a relatively high volume of imported agri-cultural products, which make up approximately 10% of all imports. In Europe, Kosovo ranks among the highest importers of food per capita (ERP, 2018).In this context and to attain the European stand-ards, improving the competitiveness of the agricultural sector becomes paramount. One way to help agricul-ture go towards competitiveness in domestic and foreign markets is to improve the technical efficiency (TE) of each agricultural sub-sector. Technical Efficiency refers to the ability to achieve the highest possible output level from a given set of inputs or resources. It measures how effectively inputs are utilized to produce desired out-puts within a production process or system. It is a fun-damental concept in economics and plays a crucial role in various fields, including agriculture, manufacturing, healthcare, and public services. According to Koopmans (1951, as cited in Farrell, 1957, p. 255; Charnes & Cooper, 1985, p. 72) provided a definition of what we refer to as technical efficiency, stating that an input-output vector is technically efficient if increasing any output or decreas-ing any input can only be achieved by decreasing some other output or increasing some other input. In the context of agriculture, Technical Efficiency is particularly significant as it directly impacts food production, resource utilization, and sustainability. By measuring and improving Technical Efficiency, policy-makers, farmers, and stakeholders can make informed decisions, allocate resources effectively, and drive agri-cultural development.In this study we focus on the horticultural farms from FADN data, which includes TE for vegetables cul-tivated indoor in greenhouses and vegetables cultivated outdoor. In comparing the 2019 total share of agricul-tural crops’s production to 2018, 2019’s vegetables lead with the highest percentage 33.4%, followed by fodder crops, cereals, fruits and others (MAFRD 2020). Accord-ing to the green report from MAFRD (2020) the total area cultivated with vegetable during 2019 was 18,911 ha. The crops that dominate the largest area in 2019 were potato (20%), pepper (16%), beans (15%), pumpkin (13%), onion (7%) and watermelon (6%). From the total area with vegetables, the different forms of horticulture in Kosovo, with the largest part are produced in open field. In percentage, the main area used for horticulture is in the open field with 83.5% followed by garden with 11.3% and vegetables cultivated in greenhouses with 5.2% (MAFRD, 2020).Following the introduction, section two presents a comprehensive review of the existing literature. Section three provides a detailed explanation of the research methods employed, while section four elaborates on the data utilized for estimating efficiency. Moving forward, the fifth section presents the results of the technical efficiency analysis and identifies the factors that influence it. Finally, in the sixth section, the paper concludes with a summary of the analysis and discusses the policy implications derived from the findings.


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