Technical Efficiency of Italian Beef Cattle Production Under a Heteroscedastic Non-Neutral Production Frontier Approach

A stochastic production frontier has been estimated to measure the technical efficiency of an unbalanced panel of beef cattle farms extracted from the Farm Accountancy Data Network (FADN) databank of Veneto region in Italy. The technical efficiency is measured based on the estimation of a non-neutral and heteroscedastic production frontier. The model explains the average value of technical inefficiency as a linear function of the farm-specific variables (Battese and Coelli, 1995) and the input interaction variables (Huang and Liu, 1994). The inefficiency term is assumed to be distributed as a truncated normal with a heteroscedastic variance explained as a function of the farm-specific variables (Reifschneider and Stevenson, 1991). The average value of the farm technical efficiency is 78.6% ranging from a minimum of 30.6% to a maximum of 97.6%. The technical efficiency is positively related with the herd extension expressed as number of LSU (Livestock Unit), the value of beef production per LSU, the rate of purchased concentrated feed, and the percentage of concentrated feed used over the overall feed expenditure. Conversely the technical efficiency is negatively correlated with the intensification of the use of buildings investment and labour per LSU.