Adoption of BMPs and technical inefficiency in Canadian canola production

Abstract

This study examines the BMP adoption and technical efficiency for canola producers in the Canadian Prairie Provinces. A Just-Pope stochastic frontier production function is estimated using data from a survey of canola producers conducted in early 2012. Yield is modeled as a function of nutrients and precipitation. A linear inefficiency function includes farm specific variables and a set of binary variables representing BMP adoption. These include use of environmental farm plans and soil testing, precision farming techniques or nutrient management practices. Model results indicate that BMP variables for soil tests, nutrient management planning and precision farming are positively related to technical efficiency while other BMP indicators are not significant. Producer characteristics such as experience and off-farm income tend to have the expected relationship with technical efficiency. Model results appear to be significantly influenced by moisture problems that occurred through the Prairie region during the 2011 cropping year. The results in this paper suggest that for Western Canadian canola producers, there is potential complementarity for some BMPs in terms of improving technical efficiency while simultaneously advancing environmental stewardship. This study extends the limited literature that combines stochastic production frontier analysis with flexible risk specifications to incorporate environmental stewardship practices in the inefficiency model.