Capacity utilization (CU) measures may show the potential for production growth under improved availability of the (variable and fixed) inputs. However, the environmental constraints should be considered when taking the production decisions. These questions are important in the context of the agricultural sector that needs to ensure food security and sustainability. This paper proposes a novel approach that integrates weak disposability technology with observation-specific abatement factors with input- and output-orientated capacity utilization measures in the short and long run. The case of European Union agricultural sector is analyzed. The results indicate that the multiple output-oriented CU measures considered in the study yield often conflicting results. Italy, Germany and France show the highest levels of the agricultural capacity utilization. At the other end of spectrum, the underdeveloped economies often showed lower values thereof. The inclusion of the energy-related GHG emission in the model generally reduced the performance gaps among the countries considered. Results of the research are important in assessing the possibilities for sustainable agricultural growth and development in the European Union as the CU levels may vary for a certain depending on the inclusion of the environmental pressures in the model.
Keywords: Capacity utilization; Data envelopment analysis; Energy-related GHG emission; Weak disposability.
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