Efficiency Analysis of Sustainable and Conventional Farms in the Republic of Korea with Special Reference to the Data Envelopment Analysis (DEA)

Abstract

ABSTRACT This study compares the scale efficiency scores of conventional and sustainable farms. The analysis includes four different input- and output-oriented efficiency calculations by Constant Return to Scale (CRS) and by Variable Return to Scale (VRS). It was found that sustainable farms have a more profitable input/output relationship than conventional farms. According to an input-oriented scale efficiency analysis, conventional farms have a scale efficiency score of 0.896, while sustainable farms have a score of 0.977. There are, however, certain possibilities to increase the level of farm income in an input-oriented efficiency analysis by reducing present level of chemical fertilizers and pesticide application on both conventional and sustainable farms. For example, a conventional farm with a low efficiency score may increase its level of income by up to 73.2% with a 18.2% reduction in the cost of pesticide. At the same time, a sustainable farm may also increase its level of income by up to 27.69% by reducing the cost of pesticide. Conventional farms with pesticide application have the lowest efficiency score, though it is certainly possible to increase the level of farm income, according to output-oriented CRS and VRS, by reducing chemical fertilizer and pesticide applications. On conventional rice farms, cost efficiency is highest with application rates of 30 kg of chemical fertilizers, 411 ml of herbicide, and 114 g of pesticide per 0.1 ha. On sustainable farms, cost efficiency is highest with application rates of 5 kg of chemical fertilizers per 0.1 ha and no herbicide or pesticide at all. Farm efficiency is highest in rice farms where raising ducks precludes the application of pesticide.