Comparison of data envelopment and stochastic frontier models in analysis of efficiency and its factors in ginger farms in Kaduna State, Nigeria

Abstract

Nigeria is trending below the top ginger producing countries of the world in terms of yield per hectare and national output. Technical Inefficiency due to poor combination and utilization of physical resources in the production of ginger is a major factor for low yield/output. Previous studies employed either Stochastic Frontier Analysis (SFA) or Data Envelopment Analysis (DEA) to measure technical efficiency. So, the question arises as whether the technical efficiency estimates from both methods are similar or not. The present study deployed the two common approaches (SFA and DEA) in estimation of technical efficiency and its determinants in order to ascertain the similarity or otherwise of the estimates. Two hundred and five (205) ginger farmers were randomly sampled for primary data collection. Analyses of the data were done through Descriptive Statistics, DEA, Tobit regression and SFA. The results show that means of the efficiency scores from both models namely DEA (0.70) and SFA (0.88) were significantly different at 1% probability level. However, estimates from both method suggest that the ginger farmers were operating at suboptimal level or below frontier. Also, the results of determinants of efficiency from two estimation methods (SFA and DEA-based Tobit regression) were dissimilar. While SFA method shows that household size, level of education and farming experience were responsible for enhancing the efficiency of ginger farms, none of these variables influenced the farmers’ efficiency under Tobit regression. Therefore, it is recommended that selection of efficiency estimation method between SFA and DEA by the researcher should be based on study objective rather than consideration on the premise of alternative opportunity. Also, greater output level or potential output can be achieved, given the current production technology, by educating ginger farmers on how to ensure that production inputs are combined and managed efficiently. Keywords: Comparison, DEA, SFA, Efficiency, Ginger Farms