Decomposition of output growth in the Tunisian olive-growing sector: A frontier production function approach

The aim of this paper is to investigate the relative contribution of technical efficiency, technological change and increased input use to the output growth of the Tunisian olive oil growing farms using a stochastic frontier production function approach applied to panel data for the period 1995- 1997. The proposed methodology is based on the use of a flexible translog functional form. Results indicate that technical efficiency of production in the sample of olive producing farms investigated ranges from a minimum of 24.8% to a maximum of 84.6% with an average technical efficiency estimate of 48.5%. This suggests that olive producers may increase their production by as much as 51.5% through more efficient use of production inputs. Further, the production is characterised by decreasing returns to scale, which on average was 0.8. Finally, investigation of the sources of production growth reveals that the contribution of conventional inputs (labour, in particular) and technical change are found to be the main source of that growth, since total factor productivity increased during the study period, but at a slowing rate.