Impact of Energy Subsidies Elimination on Technology Gap Ratio in Cucumber Production

Abstract

This paper presents an analysis of technical efficiency and technology gap ratio (TGR) in greenhouse cucumber in Fars Province, Iran. Cucumber production was chosen for this study for the reason that greenhouse productions in this provincemainly have focused on this product. The data used in this study was obtained from a random sample of 127 greenhouses in Fars Province for 2010 to 2011. Metafrontier production function model for firms was used within the parametric framework of stochastic frontier analysis (SFA). The frontier models are applied in the analysis of cross-sectional data by assuming a translog functional form. Results indicate that eliminating energy input subsidies has led to significant decrease in greenhouse cucumber production efficiency so that the mean technical efficiency declined from 98% to 67 % during 2010-2011. Furthermore, subsidies elimination has also led to decrease of the mean technology gap ratio in greenhouses from 0.92 to 0.87, in other words, it has caused more distance from efficient production frontier.