Abstract
A Bayesian non-neutral stochastic input distance function model is used to examine whether output specialization has an impact on the economic performance of vegetable producers in Benin. Specialization is assumed to have an effect on the production frontier itself, as well as on the distance of each producer's observed data to this frontier (technical efficiency). A derivative-based measure of economies of scope is obtained by exploiting the duality between the shadow cost and the input distance functions. In this study, we also control for spatial heterogeneity of vegetable production by including a soil fertility variable in the production function at the farm level. The technology is found to exhibit no economies of scope, indicating that vegetable producers have no incentive for specialization or diversification. However, the degree of specialization has a positive effect on technical efficiency. From a policy perspective, the findings imply that policies to encourage specialization may lead to higher performance.
Highlights
Over the last four decades, agricultural productivity has been growing at fairly high rates in most regions of the world, reflecting the important role played by innovations in agriculture
The data are processed in R, and sampling from the posterior distribution of the parameters was performed in WinBUGS, which was called from R’s “R2WinBUGS” interface
We make use of a Bayesian econometrics software (BayES) which is a software designed for performing Bayesian inference using Markov chain Monte Carlo (MCMC) techniques to estimate the stochastic frontier models (Emvalomatis, 2020)
Summary
Over the last four decades, agricultural productivity has been growing at fairly high rates in most regions of the world, reflecting the important role played by innovations in agriculture. The main cause of the low levels of agricultural productivity in this region is the ineffective establishment of agricultural R&D institutions to sustain productivity growth (Feder et al, 1985; Binswanger, 1986; Jack, 2013; Reimers and Klasen, 2013; Mekonnen, 2017). This suggests the need for a more selective strategy that can help increase the competitiveness of agriculture and the viability of small-scale farms in the region. To reduce poverty and secure food needs in this region, there is a growing interest of diversifying production toward higher-value outputs
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