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Abstract
The most of Spanish olive farms are concentrated in Less-Favoured Areas (LFA) with the majority of
producer areas are under Objective 1 of the EU Regional Policy. The EU has long recognized such distinctive
characteristics of those holdings with a specific support measures aiming to prevent the abandonment of olive groves
as well as to support sustainable development of this sector. The main objective of this study is to evaluate the impact
of LFA payment on the olive farms technical efficiency. Two sample farms located in LFA (63 farms receiving LFA
payment support and 99 farms do not) have been observed from 2000 to 2004. A stochastic frontier production and
Random-effect Tobit models have been used. Results indicate that LFA payment, age of manager, workforce
composition and farm size affect efficiency levels. The LFA payment coefficient indicates a significant negative
impact on the technical efficiency of Spanish olive farms. Farms that not receive LFA payment has a technical
efficiency rate 0.15 percentage units upper compared to those that receive this payment.