How does eliminating the use of pesticides affect technical efficiency in Italian farms?

Through specific legislation such as Regulation no. 2078/92 and policies like Agenda 2000, the European Union has directed financial support towards farms that are adapting their production processes to use less fertilisers and pesticides and which, consequently, have a lower impact on the environment. In this vein, European farmers are being incentivised to follow organic farming methods and participate in other agri-environmental policies aimed at reducing the use of chemicals in agriculture. In the literature, this concern with the use of pesticides is reflected by several studies that have used a quantitative approach to investigate the environmental effects of chemical inputs and the impact of agri-environmental subsidies on technical efficiency in farms. Nevertheless, there is a gap in knowledge in assessing the effect on technical efficiency in farms of completely eliminating the use of chemical products. The purpose of this research, then, was to analyse the effect on technical efficiency of a radical reduction in the use of pesticides in Italian farms, using sample data from the Farm Accountancy Data Network (FADN) for the period 2004 to 2019, investigated in function of the different specialisation and economic size of the farms included in the data set. The level of technical efficiency in the farms included in the sample has been assessed through a non-parametric approach, using Data Envelopment Analysis in two stages, both with and then without the use of pesticides. The research findings have shown that a radical reduction in pesticides in Italian farms has had a direct impact on farms, reducing their level of technical efficiency. In particular, the results show that farms of a small economic size have suffered the greatest drop in technical efficiency. Meanwhile, the specialisation of the farm production has differently influenced the effect of a reduction in the use of chemical pesticides and fertilisers.