A data envelopment approach to support the bid/no-bid decision of smallholder farmers on public calls participation

Institutional markets are one of the main sources of income for smallholder farmers in Brazil. Among these markets, the National School Meal Program (PNAE) offers to the farmers the opportunity to supply food for public schools. There may exist distinct PNAE public calls for each school. The participation of the smallholder farmers in these public calls may be limited by their scarce sources. Thus, it became necessary to create a tool to support their decision whether they should or not take part in the completion of attending a public call. The objective of this paper is to propose a tool for priority setting decision. Data Envelopment Analysis (DEA) is applied to rank the public calls (where the public calls are incorporated into the model as Decision-Making Units - DMUs) using the relative efficiency as a ranking criterion, also the methodology proposed to evaluate the bid/no-bid decisions using DEA, applying the Composite Index (CI) tie-breaking method to all DMUs in the context of institutional markets for smallholder farmers, considers all efficient and inefficient DMU as a choice if profitable, which makes it also different from what was done in the literature. The final result shows a priority attending setting to the smallholder farmers, according to the efficiency rank. An empirical application for a group of smallholder farmers in the Brazilian State of Goiás is presented. The main contribution is helping smallholder farmers to make more grounded decisions and the application of DEA model in conjunction with tie-breaking technique of the composite index (Leta et al., 2005) for a bid/no-bid supporting-decision tool in a new context (institutional markets for smallholder farmers) and considering the inefficient DMUs if profitable.