Total factor productivity in the Lithuanian family farms after accession to the EU: application of the bias-corrected Malmquist indices

The non-parametric measures of efficiency and productivity do not enable to fathom the underlying technology changes in terms of input saving and consumption. However, the bias-corrected Malmquist productivity index offers a remedy to this shortcoming. This paper, thus, uses the bias-corrected Malmquist productivity index to measure the total factor productivity changes in the Lithuanian family farms and the technical changes (TCs) in terms of input saving or input use. Specifically, a sample of 200 family farms is used for the analysis. The research period covers years 2004–2009. Three farming types are considered: crop, livestock, and mixed farming. The analysis indicts that crop farming is peculiar with land-using and asset-saving TC, whereas labour-using and intermediate consumption saving TCs are observed only for certain combinations of inputs. Livestock farms generally experience intermediate consumption and asset saving TCs against all the remaining inputs, whereas labour-saving and land-using TC vary with the reference inputs. Finally, mixed farms can be considered as those peculiar with increasing land use and decreasing capital consumption. Labour-using and intermediate consumption saving TCs also hold for most of the analysed factors. The Lithuanian agricultural sector has not been analysed by the means of the bias-corrected Malmquist indices. Furthermore, there is a gap in the literature on the efficiency and total factor productivity in the Lithuanian farms in general. The present study, therefore, presents insights on the technology change based on non-parametric estimates.