Profitability, Productivity, and Technical Efficiency of Cretan Olive Groves across Alternative Ecological Farm Types

Abstract

Olive groves are an important element of the Mediterranean landscape and heritage and contribute significantly to the area’s rural economies. The primary interest of researchers and policymakers lies in the economic performance of this activity, especially in light of the resource limitations imposed by climate change. Profitability and productivity analyses, as well as technical efficiency methodologies, have been applied to evaluate the economic sustainability of olive cultivation and have often identified shortcomings in farms’ management and structure. In our study, we use profitability and productivity indicators, as well as data envelopment analysis, to estimate the economic performance of Cretan olive groves and a second-stage regression analysis to determine factors that affect efficiency scores. One novelty of this study is that the results are presented across alternative ecological approaches, i.e., organic, conservation, low-input, and standard farms. Our findings indicate that organic farms perform better in the examined economic indicators. On the other hand, standard farms demonstrate a low labour productivity, while conservation and low-input farms exhibit an inefficient use of capital. Scale inefficiencies indicate that certain farm types should also increase in size to be more competitive. Finally, our analysis suggests that training, market orientation, and a commitment to farming positively affect the efficiency of olive groves.