Financial Efficiency Versus Social Efficiency:
A Comparison Using Selected Agrarian Profiles
In Andalusia
Author(s)
C. R. García
Abstract
In terms of sustainability, the agrarian policy of the European Union (CAP) is
now facing a dilemma. In today’s scenario of decreasing subsidies, some
traditional agrarian enterprises may be not only financially inefficient but, even
worse, totally unprofitable. These farms nowadays manage an employment level
(family hand labour and external sources – immigration included) that helps to
maintain people in the territory. The initial purpose of this paper is to classify
selected agrarian profiles in a double entrance matrix by comparing the relative
financial and employment efficiencies.
Using Data Envelopment Analysis (DEA), considering variable returns to
scale input oriented BCC-DEA, all possible efficient frontiers are obtained. The
methodology consists of removing sequentially the corresponding efficient
agrarian profiles in the previous frontier, until there are not enough observations
to perform the analysis. Both matrix axes represent these efficient frontiers –
efficient sets of agrarian profiles – from the most efficient to the absolutely
inefficient.
The position in the matrix of an agrarian profile defines the relationship
between relative financial and employment efficiencies. Depending on its
financial result (net margin) the analysed agrarian profile may or may not need
subsidies to survive, that is maintaining its productive structure. In this situation,
these aids may be conditioned both to financial and employment efficiencies in
order to support good practices in terms of resource consumption and
employment level. For example, a non profitable (with a negative or little net
margin) but financially and socially (hand labour consumption) efficient agrarian
profile may be subsidised to maintain a stable global environment. On the other
hand, other situations should be restructured to improve their resource
consumption (including hand labour) and/or their productive structure.
Keywords
Related Book
Other papers in this volume
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