The impacts of regulated notions of quality on farm efficiency: A DEA application

Recent European Union policy has attempted to regulate agricultural quality production through schemes that either place emphasis on the physical properties and the geographical zone of production of denominated products or on methods and processes of production of organic products. This paper attempts to examine the effects of these two distinct regulated notions of quality on farm efficiency, by estimating efficiency scores using data envelopment analysis (DEA) on a sample of Greek black currant producers who either employ conventional methods of production or organic methods, and who are located either inside or outside a denominated zone of quality production. Findings indicate that the location of the farm significantly affects the technical and scale efficiency scores in the sample of conventional producers, while it does not have any statistically significant effect in the sample of organic farmers. Thus, regulating quality in terms of organic production weakens the effectiveness of regulating quality in terms of the geographical area and denomination of production. Due to these conflicting impacts of quality policy on farm efficiency, the incentives for the cultivation of organic products should apply only outside the denominated areas of quality production.