Technical efficiency in the Spanish agrofood industry

This study estimates frontier production functions with cross-section data for the Spanish agrofood industry by using deterministic and stochastic parametric approaches. We compute the individual technical efficiency for each firm, compare the results and explain the relationship between technical efficiency and other relevant quantitative variables. The results indicate that the Spanish agrofood industry has a level of efficiency between 68% and 93%; which means that it is potentially capable of increasing production without increasing its consumption of inputs. This efficiency level is positively related to factor productivity and unitary labour costs.