Azorean agriculture efficiency by PAR

Abstract

The producers always aspire at increasing the efficiency of their production process. However, they do not always succeed in optimizing their production. In the last years, the interest on Data Envelopment Analysis (DEA) as a powerful tool for measuring efficiency has increased. This is due to the large amount of data sets collected to better understand the phenomena under study, and, at the same time, to the need of timely and inexpensive information. The “Productivity Analysis with R” (PAR) framework establishes a user-friendly data envelopment analysis environment with special emphasis on variable selection and aggregation, and summarization and interpretation of the results. The starting point is the following R packages: DEA (Diaz-Martinez and Fernandez-Menendez, 2008) and FEAR (Wilson, 2007). The DEA package performs some models of Data Envelopment Analysis presented in (Cooper et al., 2007). FEAR is a software package for computing nonparametric efficiency estimates and testing hypotheses in frontier models. FEAR implements the bootstrap methods described in (Simar and Wilson, 2000). PAR is a software framework using a portfolio of models for efficiency estimation and providing also results explanation functionality. PAR framework has been developed to distinguish between efficient and inefficient observations and to explicitly advise the producers about possibilities for production optimization. PER framework offers several R functions for a reasonable interpretation of the data analysis results and text presentation of the obtained information. The output of an efficiency study with PAR software is self- explanatory. We are applying PAR framework to estimate the efficiency of the agricultural system in Azores (Mendes et al., 2009). All Azorean farms will be clustered into homogeneous groups according to their efficiency measurements to define clusters of “good” practices and cluster of “less good” practices. This makes PAR appropriate to support public policies in agriculture sector in Azores.