Efficiency and productivity in the Spanish food distribution sector

Abstract

This study investigated the efficiency and productivity change of a sample of food distribution units (MERCAs) in Spain over the 1.997-1.999 period, applying non-parametric frontier methodology in a sales efficiency framework. We specified a mean sales model composed of two blocks of variables, the production block, and the marketing management block. Then we applied output oriented DEA methodology to perform the efficiency analysis, also taking into account the overall efficiency decomposition into pure and scale efficiency. The Malmquist index was calculated in order to analyse the components of the productivity change. The mean pure sales efficiency index was high, around 0.8, the mean scale index being 0,9. As appears from the results, six food distribution units were efficient, but some of the wholesale markets need to adapt their sales technology in order that their input bundle reaches a Most Productive Scale Size unit. We found no evidence of technical change during the period considered, but concluded that a notable scale efficiency change took place during the studied period. To summarise, we conclude that improvement in sales efficiency could be reached in the studied sector in both the pure and the scale efficiency.