Highlighting the Drivers of Italian Diversified Farms Efficiency: A Two-Stage DEA-Panel Tobit Analysis

Abstract

Farm diversification is an important phenomenon in agricultural systems and rural development in Europe, pursuing economic, social and environmental goals. For the sustainability of diversified farms, it is important to analyse some drivers affecting farm efficiency, for instance, socio-economic, technical and policy drivers. The efficiency performance of a panel of Italian farms practising other gainful activities in the period 2012–2017 was investigated and regressed against the drivers that mostly affects farm performances. FADN data and a two-step approach were used. An output-oriented Data Envelopment Analysis was applied; in the second step, efficiency scores were used as a dependent variable in a panel Tobit regression analysis used to determine differences in the significance of drivers. Social, economic, technical and policy drivers were considered as explanatory variables. Results show margins for improving farms performances. The incidence of the output from other gainful activities has been proven to positively affect farms efficiencies, while intermediate costs are the most negatively impacting factor. As regards policy variables and implications, the significance of localization in mountain disadvantaged territories further supports the relevance of EU subsidies in less-favoured areas. Managerial implications in terms of technical, structural and economic indicators can be drawn from study findings.