Measuring technical efficiency in Italian cooperatives: a study in the fruit and vegetable sector

Rural development is aimed at providing rural areas with urban population’s life conditions. For that reason it is important to support efficient agents capable of generating initiatives to help the rural community's development by enhancing its whole available and potential resources. Agricultural cooperatives stand out due to their special link to rural population and the territory where they are settled. The study of the performance of these businesses is gaining in importance, mainly in connection with its measure to deal with the businesses’ different characteristics. Therefore, the objective of this work is to check the suitability of the Data Envelopment Analysis (DEA) to measure the agricultural cooperatives’ efficiency. The findings obtained from an empirical analysis carried out on 81 Italian cooperatives operating in processing and preserving of fruit and vegetables in the period 2001-2005 shows that in the whole evaluated period the average technical efficiency was on 92% referred to the variable returns to scale model and 83% considering the constant to return model. The tendency of the technical efficiency (TE) to decrease during the period considered depends on the low level of scale efficiency (SE). In particular this inefficiency of scale is represented by the imbalance between the size of the cooperatives and the reached production levels.