An Assessment of the Governance Efficiency of Agricultural Farms

Despite the fundamental progression of the theory of economic organizations, Farm continues to be studied as a "production function" and its efficiency is assessed with "factors productivity". The report incorporates the New Institutional Economics and adequately defines and assesses the economic efficiency of Bulgarian farms. If inputs supply and marketing transactions of a farm are governed effectively (equal or fewer costs compared to another farm/organization), it is considered to be efficient, and vice versa. First in kind quantitative evaluation of governance efficiency of Bulgarian farms is made on the basis of assessments of managers of typical farms. "Nature of the problems in effective organization for major type farm transactions for securing needed factors of production and output realization" is used as an indicator for the comparative transaction costs. The study has found that the governance efficiency of farms is at a Good level but 60 % of all farms are with a Low efficiency and will likely cease to exist in near future. Major factors for inferior governance efficiency of farms are unsatisfactory efficiency in Supply of Necessary Labour, Innovations and Know-how, and Funding. There is a huge variation in governance efficiency of farms with different specializations as holdings in Field crops, Vegetables, Flowers and Mushrooms, and Mix livestock demonstrate the lowest levels. There is a big discrepancy between the new assessment and the dominating traditional approach to farm efficiency. The suggested framework has to be improved and widely applied in economic analysis at various levels, which require the collection of a novel type of micro-data on farms governance and transaction costs