Technical Efficiency in the Agricultural Business—The Case of Slovakia

Abstract

The key element of the European Union (EU) Common Agricultural Policy is sustainable agriculture where the social, economic, and environmental objectives should be fulfilled. This role can fulfill only those agricultural holdings that are effective in the transformation of inputs to outputs, and which do not waste the inputs. Therefore, we analyze the technical efficiency of the agricultural holdings in the Slovak regions, and try to identify the factors that are able to influence the efficiency of agricultural holdings. We can conclude that there are regional disparities in technical efficiency in Slovakia; however, the problem of inefficiency is not typical only for the agricultural holdings in the areas with natural constraints. These regional disparities should be considered when adopting a new political measure to support sustainable agriculture. By the results of econometric models, we find that the agricultural production diversity, the policy of the labor market, and tax policy are the important factors influencing the technical efficiency of the agricultural holdings in Slovakia.