Evaluating the potential effectiveness of rural development programme targets on farms in FYR Macedonia - An efficiency study of grape-growing family farms

The validity of the rural development programme (RDP) targets chosen by government for farms in Former Yugoslav Republic (FYR) of Macedonia was examined by evaluating the influence of these targets on the farm efficiency. The method comprises two steps, with data envelopment analysis (DEA) applied to calculate farm efficiency in the first step and a Tobit regression analysis to examine the influence of RDP targets on efficiency in the second step. Farm-level data from a 2006–2008 survey were used to examine RDP measures targeted at stable yield, yield improvement and modernisation of equipment. The results indicate huge potential for efficiency improvement. More efficient farms used a smaller area, irrigated a smaller proportion of their total area, used less hired labour and used and paid less for inputs, but produced a larger quantity, with higher value per hectare. It was shown that not all the RDP targets implemented to improve efficiency were justified