Technological Heterogeneity in Pig Farming: A Metafrontier Approach—Perspectives from Hungary and Poland

Abstract

Despite remaining the most important type of animal production, pig production in Poland and Hungary declined after their accession to the European Union (EU) in 2004. This paper investigated the evolution of the technical efficiency of the pork industry in both countries. We applied stochastic frontier analysis, which takes into account heterogeneity in the production environment and production functions in both countries—true random effects, and a metafrontier model. We employed farm-level data from the Farm Accountancy Data Network sample during the period 2004–2015. Results illustrate the differences in production function in both countries and technological decline throughout the period of analysis. Furthermore, farms in Hungary were more technologically developed as well as less efficient in relation to the country frontier; however, the higher technological level resulted in generally greater efficiency in relation to the metafrontier. Our results suggest that different policy measures would be effective in the countries under analysis.