50 SEPTEMBER 2019 • WORLD AQUACULTURE • WWW.WAS.ORG scores (Tingley et al. 2005): the stochastic production frontier (SPF) and the data envelopment analysis (DEA). Efficiency studies of aquaculture are relatively few compared with other industries and they are focused mainly on non-European countries (Alam 2011). Thus, it is necessary to study this factor to analyze the competitiveness of the European industry. The purpose of this work was, therefore, to evaluate the technical efficiency of European producers of cultured sea bass and sea bream in the Mediterranean Sea. Study Methods We adopted the stochastic production frontier (SPF) model proposed by Battese and Coelli (1992) for panel data to estimate the technical efficiency values (TE scores) of each firm. A translog production function was employed in the estimation of the SPF model. The efficient production frontier and TE scores for each firm were obtained using the FRONTIER 4.1 computer program. The efficiency measures obtained with this model vary between 0 and 1 with higher values reflecting greater efficiency. Estimation of the production function was performed using a sample of 30 of the main firms producing cultured sea bass and sea bream in the Mediterranean Sea from seven European countries (Croatia, Cyprus, France, Greece, Italy, Slovenia and Spain). This sample represents approximately 30 percent of the total aquaculture firms for which the main activity is the production of cultured sea bass or sea bream in Europe in 2014. However, taking into account the number of employees of these firms, the sample represents approximately 66.6 percent of the total. We selected the main firms of the sector in each country. Thus, we have representation of over European sea bass (Dicentrarchus labrax) and gilthead sea bream (Sparus aurata) are economically important cultured fish species along the Mediterranean coast. Both species represented respectively 9.9 percent and 10.8 percent of the total value of the European aquaculture sector in 2015 (EU 2018). The European Union is one of the largest producers of sea bass and sea bream in the world (EU 2012), with around 165 t of production in 2016, equally divided for each species (50.4 percent for sea bream and 49.6 percent for sea bass). Greece is the largest producer in the European Union with 91.8 t, followed by Spain with 35.4 t (Fig. 1). The smallest producers in Europe are Slovenia and Portugal (Fig. 1). From 2005 to 2014, European producers of cultured sea bass and sea bream have had to compete strongly among themselves as well as with Turkish producers to be competitive (Globefish 2015). One important factor of economic competitiveness is technical efficiency. Technical efficiency (TE) refers to the ability of a decision-making unit (farm or firm) to minimize input used in the production of a given bundle of outputs, or the ability to obtain maximum output from a given bundle of inputs (Farrell 1957). Measurement of TE is based upon deviations of observed output from the best production function, also known as the efficient production frontier. This function defines potential output that can be produced by a firm with the given level of inputs and technology (Kumar et al. 2004). Thus, if a firm’s actual production point lies on the frontier it is perfectly efficient whereas if it lies below the frontier then it is relatively inefficient, being the ratio of actual to potential production level. Two methodologies are commonly used to describe the efficient production frontier and, therefore, estimate efficiency Technical Efficiency Evaluation of European Firms Producing Cultured Sea Bass and Sea Bream in the Mediterranean Sea José L. Fernández Sánchez, Ignacio Llorente García and Manuel Luna García FIGURE 1. Distribution of European production of sea bass and sea bream (2016). Source: EUMOFA using EUROSTAT data. FIGURE 2. Annual evolution of firms’ average estimates of TE scores.
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