Technical Efficiency in the European Dairy Industry: Can We Observe Systematic Failures in the Efficiency of Input Use?

The paper provides findings on the technical efficiency of European dairy processing industry, which is one most important subsectors food industry in Union (EU). ability to efficiently use inputs production outputs a prerequisite for sustainability and competitiveness agri-food sector as well security. Thus, aim this provide robust estimate by employing new advances productivity analysis, investigate input 10 selected countries. analysis based two-stage stochastic frontier modelling incorporating country-specific distance function (IDF) estimates meta-frontier estimate, both specification four-component model, currently represents advanced approach analysis. To these models, employs methods that control potential endogeneity netputs multi-step estimation procedure. results, Amadeus dataset, reveal companies manufacturing products greatly exploited their possibilities 2006–2018. analysed countries cannot generally be characterized considerable waste resources. cost reduction estimated at 4–8%, evaluated country samples mean. overall inefficiency (OTE) mainly result short-term shocks unsystematic failures. However, also certain degree systematic failure, e.g., permanent managerial failures structural problems industry.