The inefficiency and production costs due to parcel fragmentation in olive orchards
New Medit, vol 16, n.2, (June 2017), pp. 2-10
Jel classification: Q12, O13
Olive trees in the Mediterranean countries comprise the most widespread fruit-tree
crop. Spain, Italy and Greece, the three main producer countries in Europe, account
for 65% of the total world production. The production structure of olive
farms in these countries is mainly characterized by traditional small-scale management.
In addition to a small size, these farms also have a highly fragmented
structure, typically made of several scattered parcels. The fragmented structure
hampers farm competitiveness by raising production costs. This leads to a progressive
exclusion of these farms from international markets and eventually to land
abandonment. Here, we quantify the inefficiency due to parcel fragmentation, in
particular losses due to the border effect, and we propose farmers’ cooperation as
a measure to reduce such losses. The results indicate significantly lower efficiency
due to parcel fragmentation. Currently, farmers are managing around 14.4% of olive
orchards inefficiently relative to a comparable situation without fragmentation.
The results call for specific agricultural policies that foster cooperation among
farmers in order to reduce parcel fragmentation and production costs.