The Influence of Accounting Information Use on Small Farm Inefficiency

This paper aims to estimate a translog stochastic frontier production function in the analysis of a balanced panel of 147 mixed Catalan farms in a five-year period (1989-1993), in order to attempt to measure and explain variation in output inefficiency scores with a one-stage approach. The mean output efficiency in the period analysed was estimated to be 62.3%. Using techniques for confidence interval estimation we showed that 62.7% of the observations present efficiency scores statistically lower than 0.95. In the inefficiency effects model we test the influence of management on technical efficiency by including variables that relate both to personal aspects and to aspects of the decision-making process of the farmer. Fully integrated management based on reliable accounting information and comprising planning and control phases reveals to be a significant factor positively affecting farm efficiency. Farm efficiency levels were also found to be positively influenced by farm size, and farm environmental variables such as rented and irrigated area are seen to negatively influence farm efficiency levels.