About the Governance Efficiency of Agricultural Farms. The Case of Bulgaria
The New Institutional Economics framework is incorporated and a practical approach for assessing the level and factors of governance efficiency of Bulgarian farms suggested. The evaluation is made on the basis of original micro-data collected by the managers of typical farms of different type and location. The "Nature of the problems in effective organization for major class farm transactions for securing needed factors of production and output marketing" is used as an indicator for the comparative efficiency and adaptability of individual farms.
The study found that the governance efficiency of farms is at a Good level but 60% of all holdings are with a Low efficiency. Major factors for inferior governance efficiency of farms are unsatisfactory efficiency in supply of necessary labor, innovations and know-how, and funding. There is a huge variation in the level and factors of governance efficiency of farms with different juridical types and sizes as well as in the share of farms with different levels of efficiency in each group. A strong correlation is found between the level of governance efficiency of farms, and diverse critical internal and external market, technological, institutional, personal, etc. factors. There is a big discrepancy between the “new” assessment of Governance efficiency with dominating traditional approaches for farm efficiency assessments based on factors' productivity. There was an improvement in the overall governance efficiency of farms during 2016-2020 but the share of efficient farms significantly declined during the period.
Copyright© 2022 The Author(s). This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.
Bachev, H. (2022). About the governance efficiency of agricultural farms. The case of Bulgaria. Journal of Applied Economic Sciences, Volume XVII, Spring, 1(75), 5 – 20. https://doi.org/10.57017/jaes.v17.1(75).01
[1] Abdulai, A. and Huffman, W. 2000. Structural Adjustment and Economic Efficiency of Rice Farmers in Northern Ghana. Economic Development and Cultural Change, 48(3). https://doi.org/10.1086/452608
[2] Asfaw, M., Geta, E., Mitiku, F. 2019. Economic Efficiency of Smalholder Farmers in Wheat Production: The Case of Abuna Gindeberet District, Western Ethiopia. Review of Agricultural and Applied Economics, Acta Oeconomica et Informatica, 22(1): 65-75. https://doi.org/10.15414/raae.2019.22.01.65-75
[3] Bachev, H. 2004. Efficiency of agrarian organizations. Farm Management and Rural Planning, 1: 135-150.
[4] Bachev, H., 2006. Governing of Bulgarian Farms – Modes, Efficiency, Impact of EU Accession, in J. Curtiss, A. Balmann, K. Dautzenberg and K. Happe (editors), Agriculture in the Face of Changing Markets, Institutions and Policies: Challenges and Strategies, Halle: IAMO, 133-149.
[5] Bachev, H. 2009. Mechanisms of Governance of Sustainable Development, Journal of Applied Economic Science, Volume IV, Summer, 2(8): 169-184.
[6] Bachev, H. 2010a. Governance of Agrarian Sustainability, New York: Nova Science Publishers.
[7] Bachev, H. 2010b. Management of Farm Contracts and Competitiveness, VDM Verlag Dr. Muller, Germany.
[8] Bachev, H. 2016. Defining and Assessing the Governance of Agrarian Sustainability, Journal of Advanced Research in Law and Economics, Vol. 7(4): 797-816.
[9] Bachev, H., and Terziev, D. 2018. A Study on Institutional, Market and Natural Environmental Impact on Agrarian Sustainability in Bulgaria, Journal of Environmental Management and Tourism, Vol. 9(3): 452-478.
[10] Bachev, H. 2018. The Sustainability of Farming Enterprises in Bulgaria, Cambridge Scholars Publishing.
[11] Bachev, H. and Nanseki, T. 2008. Environmental Management in Bulgarian Agriculture – Risks, Modes, Major Challenges, Journal of the Faculty of Agriculture of Kyushu University, 53(1): 363-373.
[12] Bachev, H. and Terziev, D. 2017. Environmental Sustainability of Agricultural Farms in Bulgaria, Journal of Environmental Management and Tourism, Vol. 8(5): 968-994.
[13] Bachev, H. and Tsuji, M. 2001. Governing of Agrarian Transactions. Management and Rural Planning, 2, 185-202.
[14] Bashev, H. 2012. Efficiency of Farms and Agrarian Organizations, Economic Thought Journal, 46-77.
[15] Boevsky, I. and Sarov, A. 2017. Cooperative Governance-Challenges and Perspectives. Proceeding Scientific Forum, The XXI Century Business-Trends and Challenges, UNWE, Sofia, 366-377.
[16] Ciaian, P., Pokrivcak, J., Drabik, D. 2009. Transaction costs, product specialization and farm structure in Central and Eastern Europe, Post-Communist Economies, 21(2): 191-201.
[17] Chetroiu, R. and Călin, I. 2013. The Concept of Economic Efficiency in Agriculture. Online at https://mpra.ub.uni-muenchen.de/55007/, MPRA Paper No. 55007.
[18] Combary, O. 2017. Analyzing the efficiency of farms in Burkina Faso. African Journal of Agricultural and Resource Economics, 12(3): 242-256.
[19] Davidova, S. and Thomson, K. 2014. Family Farming in Europe: Challenges and Prospects. European Parliament.
[20] Demir, I., 2016. The firm size, farm size, and transaction costs: the case of hazelnut farms in Turkey, Agricultural Economics, 47(1): 81-90.
[21] Debebe, S., J. Haji, D. Goshu, A.Edriss, 2015. Technical, allocative, and economic efficiency among smallholder maize farmers in Southwestern Ethiopia: Parametric approach. Journal of Development and Agricultural Economics, 7(8): 283-292. https://doi.org/10.5897/JDAE2015.0652
[22] Foster, A. and M. Rosenzweig, 2022. Are There Too Many Farms in the World? Labor Market Transaction Costs, Machine Capacities, and Optimal Farm Size. Journal of Political Economy, (Early Access).
[23] Furuboth, E. and R. Richter, 2000. Institutions and Economic Theory: The Contribution of the New Institutional Economics. Ann Arbor: The University of Michigan Press.
[24] Gaviglio, A., Filippini, R., Madau, F., Marescotti, M., Demartini, E. 2021. Technical efficiency and productivity of farms: a periurban case study analysis. Agricultural and Food Economics, 9(11): 1-18. https://doi.org/10.1186/s40100-021-00181-9
[25] Gunes, E., H. Guldal, 2019. Determination of economic efficiency of agricultural enterprises in Turkey: A DEA approach. NEW MEDIT, 4: 105-115. https://doi.org/10.30682/nm1904h
[26] Guth, M. and K. Smędzik-Ambroży, 2020. Economic resources versus the efficiency of different types of agricultural production in regions of the European union, Economic Research-Ekonomska Istraživanja, 33(1): 1036-1051. https://doi.org/10.1080/1331677X.2019.1585270
[27] Habtamu, A., Lien, G., Hardaker, J. 2018. Economic performance and efficiency determinants of crop-producing farms in Norway. International Journal of Productivity and Performance Management, 67(9): 1418-1434. https://doi.org/10.1108/IJPPM-01-2018-0026
[28] Hakim R., Haryanto, T., Sari, D. 2021. Technical efficiency among agricultural households and determinants of food security in East Java, Indonesia. Scientific Reports, 11, 4141. https://doi.org/10.1038/s41598-021-83670-7
[29] Hoppe, B., 2021. Diverse Family Farms Are Important to US Agriculture. Economic Research Service in Farming Research and Science. USDA.
[30] Huy, H., M. Lyne, N. Ratna, P. Nuthall, 2016. Drivers of transaction costs affecting participation in the rental market for cropland in Vietnam. Australian Journal of Agricultural and Resource Economics, 60(3): 476-492.
[31] Georgiev, M. and A. Roycheva, 2017. New Institutional Economics and Methods for Measuring the Adaptation of Bulgarian Agriculture. Trakia Journal of Sciences, 15(1): 199-205. https://doi.org/10.15547/tjs.2017.s.01.037
[32] James, H., P. Klein, M. Sykuta, 2011. The adoption, diffusion, and evolution of organizational form: Insights from the agrifood sector. Managerial and Decision Economics, 32(4): 243-259.
[33] Kopeva, D. and N. Ivanova, 2008. Efficiency and Sustainable Development of Bulgarian Farms (On the Basis of Cereal, Fruit and Vegetables Production). Management and Sustainable Development, 3-4 (2): 128-133.
[34] Koteva, N., 2014. Agricultural Farms Economic Effectiveness in Bulgaria. Agricultural Economics and Management, 59(2): 20-32.
[35] Mack, G., Kohler, A., El-Benni, N. 2019. Determinants of the perceived administrative transaction costs caused by the uptake of an agri-environmental program. Journal and Environmental Planning and Management, 62(10): 1802-1819.
[36] Maurice, D., Adamu, Y., Joseph, M. 2015. Analysis of Cost Efficiency in Food Production Among Small-scale Farmers in Adamawa State, Nigeria, Global Journal of Agricultural Sciences, 14: 17-25, http://dx.doi.org/10.4314/gjas.v14i1.3
[37] Masterson, J. 2007. Productivity, Technical Efficiency, and Farm Size in Paraguayan Agriculture. Working Paper No. 490, The Levy Economics Institute Working Paper Collection.
[38] Masuku, B. and Belete, A. 2014. Economic Efficiency of Smallholder Dairy Farmers in Swaziland: An Application of the Profit Function. Journal of Agricultural Studies, 2(2): 132-14. https://doi.org/10.5296/jas.v2i2.6046
[39] Massey, R., Sykuta, M., Pierce, V. 2020. Contracts in agriculture. Farm management. University of Missouri. https://extension.missouri.edu/media/wysiwyg/Extensiondata/Pub/pdf/agguides/agecon/g00312.pdf
[40] Mugwagwa, I., Bijman, J. Trienekens, J. 2020. Typology of contract farming arrangements: a transaction cost perspective, AGREKON, 59(2): 169-187.
[41] Okoruwa, V., Akindeinde, A., Salimonu, K. 2009. Relative Economic Efficiency of Fars in Rive Production: A Profit Function Approach in North Central Nigeria, Tropical and Subtropical Agroecosystems, 10(2): 279-286.
[42] Radeva, D. 2017. Economics of the New Alternative Agriculture - Permaculture. PhD dissertation, UNWE, in Bulgarian.
[43] Skarżyńska, A. 2019. Economic Size and Production Efficiency of Farms Specializing in Field Crops in Poland. Problems of Agricultural Economics, 1(358): 64-87.
[44] Sykuta, M. and Cook, M. 2001. A new institutional economics approach to contracts and cooperatives. American Journal of Agricultural Economics, 83(5): 1273-1279.
[45] Terziyska, R., 2016. Governance of Network Structures in Agrarian Business, PhD dissertation, UNWE, in Bulgarian.
[46] Terziev D., Zhou, P., Terziyska, R., Zhang, D. 2018. Food Safety: Technologies and Governance, Sofia: Yearbook of UNWE, 121-140.
[47] Tesema, T. 2021. Determinants of allocative and economic efficiency in crop-livestock integration in western part of Ethiopia evidence from Horro district: data envelopment approach. Heliyon, 7, https://doi.org/10.1016/j.heliyon.2021.e07390
[48] Valentinov, V. and Curtiss, J. 2005. Toward a transaction cost theory of organizational change in transitional agriculture, Eastern European Economics, 43(5): 25-45.
[49] Westerink, J., Jongeneel, R., Polman, N., Prager, K., Franks, J., Dupraz, P., Mettepenningen, E. 2017. Collaborative governance arrangements to deliver spatially coordinated agri-environmental management. Land Use Policy, 69: 176-192.
[50] Williamson, O. 1996. The Mechanisms of Governance. New York: Oxford University Press.
[51] Zaimova, D. 2011. Methods for Assessing Economic Efficiency of Agricultural Farms, Economic Thought, 2: 81-94.
*** FAO, 2021. Small family farmers produce a third of the world’s food. Food and Agriculture Organization of UN.
*** MAFF, 2021. Agricultural Census, 2020. Ministry of Agriculture, Food and Forestry (in Bulgarian).