Technical,quality and environmental efficiency of the olive oil industry

This paper studies the level of technical efficiency in the olive oil industry from a multi-output perspective, and examines olive oil production in quantitative and qualitative terms. The study also covers the environmental impact of the production process. These are key issues due to the current environmental, organoleptic and food traceability requirements of the EU Common Agricultural Policy (CAP). Furthermore, product differentiation is sought after in today’s ever more demanding markets. The production of olive oil in Andalusia (Spain) is the most important agricultural food industry in the whole region and it represents 30% of world olive oil production. Three data sources have been used: a comprehensive survey to a sample of olive oil producers, their financial reports, and the opinion of a group of experts in olive oil production techniques interviewed by means of the Delphi survey. With this data and after the construction of indicators, a production frontier is elaborated by applying an extension of the Data Envelopment Analysis (DEA) technique. This will allow for the measuring of the relative technical efficiency indices and set specific efficiency indices for both the quality of the oil produced and the environmental impact of the production process. Those factors impacting on efficiency are determined by a truncated regression model with bootstrap. The results show a medium–high level of relative technical efficiency and highlight the importance of efficiency factors involving production and marketing associations.