Estimation and Determinants of Transient and Persistent Efficiency of Rice Production in Spain

ABSTRACT Rice is a basic component in the diet of more than half of the world's population, with 95% of its production destined for human consumption. Spain is the second rice producer in the European Union (EU), geographically located in four autonomous communities contributing to the local economy. This study aims at assessing the productive efficiency of rice farms in this country. To our knowledge, no previous work has dealt with the performance of rice framers in the EU in general and in Spain in particular. We used the Generalized True Ramdom‐effects model to estimate the persistent and transient efficiency levels of farms and identifying the production risk factors using a sample of 158 rice farms over the period 2014–2017. Empirical findings reveal an overall efficiency level of 0.81 on average, mainly explained by the long‐term efficiency component. Moreover, results show an important room for efficiency improvement at the short‐term to enhance productive management skills of farmers. Finally, labor, fertilizer, water and insurance spending are likely to be risk‐decreasing factors.