Cobb-Douglas Stochastic Frontier Production Research Articles

Technical Efficiency of Artisanal Fishing Households in Malawi

This study assesses the technical efficiency of artisanal fishing households in Malawi using the stochastic production frontier model, particularly, the Cobb-Douglas model. The specific objectives of the study were two-fold: to measure the productivity of the artisanal fishers in Malawi and to find the determinants of their technical efficiency. The study used data obtained from the Malawi’s Fifth Integrated Household Survey (IHS-5), and results indicate that artisanal fishers are highly productive as the Cobb-Douglas stochastic frontier production function exhibited increasing returns to scale. The study also found that the artisanal fishers are technically efficient as their mean technical efficiency score is about 99 percent, implying that on average, a typical artisanal fisher operates only 1 percent below the maximum potential output. Furthermore, the study findings indicate that amount of money a household pays as rent for a fishing gear, the number of fishers hired, and the number of fishing gears operated by a household are positive determinants of technical efficiency among artisanal fishers; whereas the payment to hired fishers on credit is a negative determinant of technical efficiency among the artisanal fishing households in Malawi. Hence, two-fold policy implications emanate from the study as follows: Firstly, in order to promote technical efficiency of the artisanal fishing households in Malawi, policymakers need to intensify efforts aimed at encouraging spawning of fish by, strictly, prohibiting fishing in the fish spawning months. Secondly, policymakers need to encourage the artisanal fishers to subsidize the productive inputs in the artisanal fisheries sub-sector such as fishing gears and boats, and improve fishers access to credit.

Yield Gaps and Factors Affecting Production Inefficiency in Smallholder Oil Palm Plantations in Muaro Jambi District Jambi Province

Abstract Oil palm plantations in Indonesia, including in Jambi Province, are categorized into large private plantation, state-owned plantation, and smallholder plantation. The productivity of smallholders is the lowest compared to the other 2 categories. At the district and sub-district level, the yield of smallholder oil palm is also vary, spreading from 1,675 to 6,680 kg CPO per ha per year. The large yield variation is inseparable from the plantation management among farmers. The objectives of this research are to study the yield gap and technical efficiency of production among smallholders, and to analyze the factors that affect the technical production inefficiency in smallholder oil palm plantation. The research was conducted in Muaro Jambi District as a main palm oil producing district in Jambi Province. Data was collected from a sampel of 120 independent smallholders. One way anova test was used to study the yield gap and double natural log (ln) of Cobb–Douglas stochastic frontier production function was used to analyze the technical efficiency and some factors affects its inefficiency. The results revealed that there were significant differences in yield among smallholders based on area size, level of education, and activeness in the farmer organizations. However, on average, the management of oil palm by independent smallholders is quite technically efficient. The factor that significantly affects the level of technical inefficiency are the size of the area and farmers’ level of education.

TECHNICAL EFFICIENCY OF VEGETABLE PRODUCTION AMONG WETLAND VEGETABLE FARMERS IN SOUTHWEST NIGERIA

This study employed Cobb-Douglas Stochastic Frontier Production function to measure technical efficiency and its determinants among dry season vegetable farmers in selected wetland catchments in Southwest Nigeria. A multistage random sampling procedure was adopted to select 450 wetlands vegetable farmers across Oyo, Ogun and Lagos States and data were collected with the aid of structured questionnaire in 2020. Technical efficiency (TE) estimates indicated that wetlands vegetable farmers operated below the production frontier with the mean technical efficiency value of 0.74. Increased farm size, family labour, quantity of seed planted, and quantity of agrochemical significantly (p<0.01) improved the farmers’ technical efficiency level. The study found that extension contact, access to credit, farming experience, and membership of an association negatively and significantly related to technical inefficiency at 1 and 5%. Weighted average price and household size were significantly and positively related to technical inefficiency. It was recommended that attention should be given to improvement in the visitation by extension agent, the provision of improved seeds and affordable financial support. Key words: Efficiency, Stochastic frontier, Vegetable, Wetland,

Untapped Potential of Manufacturing MSEs in Bali Amidst the Covid-19 Pandemic

The macro health impact of the COVID-19 pandemic that resulted in an economic slump in Bali exposed the need for economic development outside the tourism sector. Manufacturing Micro and Small Enterprises (MSEs) is one sector that contributes significantly to the economy, export value, and employment, particularly during moments when the tourism sector is down. This study aims to determine the performance of manufacturing MSEs during 2018-2021 using Cobb-Douglas stochastic frontier production function analysis. The Technical Inefficiency (TE) value of manufacturing MSEs in Bali was 22.24% over 2018-2021. The impact of COVID-19 on each ISIC and business location has a varied impact on the production value of MSEs Manufacturing. The gender of the business owner, financial service, age of workers, and source of raw materials are inefficiency variables that significantly affect production value. However, the training received by manufacturing MSEs had no significant effect. The findings from this study can be used as a basis for government policy in further developing the untapped potential of manufacturing MSEs in Bali regarding impacts upon Bali's tourism sector during the pandemic.JEL Classification: D24, E23, J16, L86, O14 How to Cite:Candrawati, I.A., & Purwanti, P.A.P. (2023). Untapped Potential of Manufacturing MSEs in Bali Amidst the Covid-19 Pandemic. Signifikan: Jurnal Ilmu Ekonomi, 12(2), 383-398. https://doi.org/10.15408/sjie. v12i2.32389.

Assessment of The Technical Efficiency and Cost and Returns on Seed Yam Farms in North-Central

Achieving maximum output with a minimum level of resources has been a major discourse in recent years mostly in Nigeria’s seed yam production. Thus, the study evaluated the technical efficiency of the CAY- and NRCRI - seed yam farm and the costs and returns to seed yam production of CAY- and NRCRI - seed yam farms. The study adopted a quantitative research approach. Similarly, a multistage sampling method was used to 283 seed yam farmers. Descriptive statistics, cobb douglas stochastic frontier production function model and gross margin analysis were used for the study. The findings of the study revealed that technical efficiency scores of CAY- (20%) and NRCRI (17%) – seed yam farmers were generally low respectively, Similarly, CAY-Seed yam farmers’ farms had a higher gross margin ($199.64) when compared to NRCRI seed yam farmers’ farms ($97.29), The study concludes that seed yam technologies did not generally improve the technical efficiency of the seed yam farms. The study recommends that external factors such as seed yam varieties used should be assessed. For instance, farmers’ compliance to technologies introduced and the state of health of seed yam farmers should be considered in determining the technical efficiency of farms.

Cost Efficiencies of the Shrimp Fishery in Mexico: A Stochastic Frontier Analysis

Fishing sector fuel subsidies are designed to increase profitability by reducing costs. However, despite the number of liters of fuel subsidized in 2018 in Mexico, there is no information available on the effectiveness of the subsidies in reducing cost inefficiencies. The purpose of this study was to estimate the cost efficiency of shrimp fishing companies in Mexico, as well as measure the impact of fuel subsidies on the cost inefficiency of the sector from 2003 to 2018. The True Fixed Effects model was used to represent a Cobb–Douglas stochastic production frontier, which included a shrimp fishing inefficiencies model. The results indicate that shrimp fishing companies could reduce their costs by 25% without reducing their catch levels. Fishing companies in the Gulf of Mexico were more efficient than those operating in the Gulf of California and the South Pacific. Fuel subsidies reduce cost inefficiencies, with a greater effect when the subsidy reaches a level of 20% of the total liters of subsidized fuel.

Production function estimation analysis of black grape farming in Buleleng District-Indonesia

This study aims to estimate the production function of black grape farming. The research was conducted in Buleleng Regency. This area was taken purposively. The sample village is Kalianget Village. The sample size was 33 farmers. Sampling was done by Simple Random Sampling method. The data used were primary data and secondary data. Data analysis method used Cobb-Douglas Stochastic Frontier production function model. The results showed that cultivation technology is relatively traditional, the use of production factors is not in accordance with the recommended dosage. The use of production inputs of urea fertilizer 1622 kg/ha/year, urea fertilizer 714 kg/ha/year, and Organic fertilizer 1544 kg/ha/year. The production achieved was only 18.49 kg/ha/year. The use of production inputs simultaneously had a significant effect on black grape production. Variables of land area, NPK fertilizer, Urea fertilizer, Organic fertilizer, and labor have a significant effect on black grape production. Technical efficiency; ET = 0.83, meaning that the achievement of black grape farming production is 83% of Frontier production, black grape farming can be concluded for the use of production inputs used by farmers has been technically efficient.

The Economic Efficiency of Rice Farming Production Factors in Karawang Region

The population's food needs are increasing during the COVID-19 pandemic. If the pandemic lasts longer, it is feared that a food crisis will occur, because residents will scramble to stock up on food. This study aims to analyze the efficiency level of rice productivity and the determinants that affect rice productivity to face the food crisis. This study uses secondary data and primary data, obtained from interviews. The data analysis method used is the Cobb-Douglas Stochastic Frontier Production Function approach with the Maximum Likelihood Estimation (MLE) method and multiple linear regression, which is obtained using Stochastic Frontier Analysis and E-Views 8 analysis tools. Production of land area, seeds, and pesticides have a significant effect on rice production in Karawang Regency. While the use of production factors of urea fertilizer, NPK fertilizer, SP36 fertilizer and labors workdays did not have a significant effect on rice production in Karawang Regency. The level of technical efficiency in rice farming in Karawang Regency reaches 0.9607 which indicates that rice farming is technically close to efficient. The combination of the use of land area production factors, seeds, urea fertilizer, SP36 fertilizer in rice farming in Karawang Regency has not yet reached the optimal point that is economically efficient. The level of elasticity of production in rice farming in Karawang Regency reaches a value of 1.3971 so that rice production has a scale that is increasing return to scale.

Production Efficiency Measurement of Seaweed Cultivation In The Specific Economic Zone of Mandalika, Central Lombok Regency

Central Lombok Regency, especially in the Specific Economic Zone (SEZ) Mandalika apart from being a tourism area it is also one of the centers for seaweed cultivation in NTB Province, seaweed cultivation in the SEZ Mandalika, Central Lombok Regency currently still has several problems, one of which is business productivity which is still low. The low productivity of seaweed cultivation can be caused by inefficient allocation of inputs. The aims of this study were: 1) to analyze the factors that affect the production of seaweed aquaculture, 2) to analyze the level of efficiency of the production of seaweed aquaculture, and 3) to analyze the factors that influence the level of technical inefficiency of seaweed cultivation in SEZ Mandalika, Central Lombok Regency. This study uses a descriptive research method with a mixed method research approach. Collecting research data using survey techniques through interviews with respondents as many as 30 people who were taken by accidental sampling. Analysis of the data in this study using the method of Cobb-Douglas stochastic frontier production function to measure the level of production efficiency of seaweed cultivation in SEZ Mandalika, Central Lombok Regency. The results of this study indicate that seaweed production is significantly influenced by the variables of area, seeds, and labour. The level of production efficiency of seaweed cultivation is efficient with a production efficiency value of 0.861. Then the factors that affect the technical inefficiency of seaweed cultivation in Central Lombok Regency include level of education and dummy farmer groups.

Technical Efficiency Analysis of Layer and Broiler Poultry Farmers in Pakistan

Achieving high production with limited resources is a major challenge faced by poultry farmers in countries with developing economies, such as Pakistan. Optimization of the technical efficiency (TE) of poultry business operations is a promising strategy. A representative sample of 210 poultry farms in the province of Punjab in Pakistan was analyzed for TE. The studied sample comprised 105 layer chicken farms (battery cage system, egg production) and 105 broiler chicken farms (environmental control shed system, meat production). A Cobb–Douglas stochastic frontier production analysis approach with the inefficiency effect model was used to simultaneously estimate TE levels and identify factors that influence efficiency. The results indicated that flock size, labor, feed, and water consumption are positively related to egg production, whereas vaccination was found to be insignificant. For broiler businesses, flock size, feed, and water consumption were positively related to the output, whereas labor and vaccination were found to be insignificant. The results of the TE inefficiency effect model revealed that farmer age, education, experience, access to credit, and access to extension services all had a significant and positive influence on the technical efficiency of both layer and broiler farmers. The estimated mean TE level of layer and broiler poultry farmers was 89% and 92%, respectively, evaluated against the benchmark of the identified frontier of efficient production with prevailing systems. The study concludes that it is possible to increase egg production by 11% and meat production by 8% by making more efficient use of the available resources and technology. To improve poultry farmers’ efficiency, policy interventions should focus more on the pronounced effects of variables such as education, farmer experience, credit access, and extension services.

The Determinants of Farmers’ Technical Efficiency in Corn Production: Empirical Evidence from Jambi Province

The various levels of production will reflect uncertainty and risk factors in corn farming. The main problem in corn farming is that the productivity level is still low. This low level of productivity is due to farmers’ limited ability to allocate inputs such as seeds, fertilizers, and appropriate pesticides in peat land. This study aimed to estimate technical efficiency and its determinants in corn production in Jambi Province, Indonesia. In this study, 2020 corn planting season data were used. A sample of 120 corn farmers was taken randomly by the stratified random sampling technique based on cross-sectional data that were collected in 2021. The Cobb-Douglas stochastic frontier production function with incorporation of inefficiency effects was employed to analyze the data. According to the results, the technical efficiency rate ranged from 63.46% to 99.54%, with an average of 74%. The significant factors found to positively affect corn yield were seed quantity, potash fertilizer, labor, and corn variety. Meanwhile, nitrogen fertilizer and pesticide were negatively related to corn yield. The significant determinants of technical efficiency that were positively related to technical inefficiency included educational attainment, training, credit access, and household labor

ANALYSIS OF PROFITABILITY AND TECHNICAL EFFICIENCY OF BROILER PRODUCTION IN NORTH-CENTRAL, NIGERIA.

The study was carried out to determine the profitability and technical efficiency of broiler production in North-central, Nigeria. A multistage sampling technique was employed in the selection of 156 respondents. Data were analysed using descriptive statistics, budget technique and Cobb-Douglas stochastic frontier production model. The result of the study reveals that the average age of a broiler farmer in the study area was 43 years with a minimum of secondary school education, 10 years of experience in broiler production and an average family size was 7 members. With an average stock of 396 birds, the gross revenue was ₦ 1,766,578, the total cost was ₦1,660,254, and gross margin recorded was ₦106,324. The estimate of the production model revealed that initial stock, feeds, and medication were the significant inputs that influenced the production of broilers. The technical efficiency estimates of the broiler farmers ranged from 78% and 100% with a mean technical efficiency of 92.5%. The high cost of feeds, which constituted 76% of the total variable cost, was identified as the major constraint to broiler production. It is therefore recommended that initiatives that could drastically reduce market price of feeds should be implemented by relevant agencies of governments and NGOs.

Improving Rice Production Efficiency in Myanmar by Controlling for Environmental Production Factors

Rice is the dominant crop in Myanmar and central to the agricultural economy. To increase rice productivity, farmers’ production performance is vital. This requires adjusting the availability of physical production inputs in response to environmental conditions. Very few studies have focused on the effects of relevant environmental conditions in Myanmar, including the impact of weather shocks during the rice production. This study aimed to the improve rice production based on the present performance of rice farmers, while controlling the impact of adverse environmental conditions. Information on rice production was extracted randomly from in-depth interviews with rice farmers in the Ayeyarwady Delta region. The Cobb-Douglas stochastic production frontier function was applied to examine the effects of the underestimated environmental factors. Erratic rainfall and excessive temperature during early growth stage have a significant negative impact on monsoon rice productivity. During the 2018-2019 monsoon cropping season, different levels of yield loss due to weather shock negatively affected rice farmers’ production efficiency. Controlling the environmental conditions improved technical efficiency from 88% to 93%. Based on these findings, policy makers and stakeholders should invest in climate services development, thus enhancing farmers’ understanding of weather variability and upscaling the use of local climate adaptation strategies in accordance with the Myanmar Climate Smart Agriculture Strategy.

Technical Efficiency of Tef Producers: Evidence from West Shewa, Ethiopia

Tef ( Eragrostis tef ) is a major staple food crop and is important for generating farm income in Ethiopia and cultivated by more than 6.9 million farmers. The objectives of the study were to measure the level of technical efficiency and identify factors that cause efficiency differences among tef cultivating farmers in West Shewa, Ethiopia. The study was conducted based on the data obtained from 206 randomly selected households. For the analysis, both descriptive statistics and econometric models were used. A Cobb-Douglas stochastic frontier production model with the inefficiency effect was used to simultaneously estimate technical efficiency and identify the determinants of efficiency variations among tef producer farmers. The maximum likelihood estimates of stochastic frontier production showed that tef output was positively and significantly influenced by areas cultivated, and negatively affected by the increased seed rate and labour used. The estimated mean technical efficiency of sampled households in the study area was 84.3%, this shows that it is possible to raise tef output by about 15.7% without using additional inputs and by employing inputs on hand efficiently and there is a room to increase the output from the existing input combinations if farmers operate in an efficient manner. Livestock owned, use improved tef seed and proximity to the district market were found to negatively and significantly affect the technical inefficiency of tef producing farmers. Thus, stakeholders engaged in agriculture should emphasize on resources of farmers and the proximity to input and output market to improve the efficiency level of those less efficient farmers. Keywords: Stochastic frontier analysis; Technical efficiency; Tef ; West Shewa DOI: 10.7176/JESD/13-9-03 Publication date: May 31 st 2022

Analysis of efficiency differentials in Fadama III programme areas in Kogi State, Central Nigeria

Introduction: The impact of Fadama III programme on the efficiency levels of farmers in Kogi state, Nigeria was investigated.
 Materials and methods: Primary data were obtained with a questionnaire administered to 382 respondents selected through a stratified random sampling procedure. The Cobb-Douglas stochastic frontier production and cost functions were employed in the analyses. The resulting efficiency estimates for beneficiaries and non-beneficiaries were compared using the t-test.
 Major findings: Efficiency analyses indicate that the quantities of Seed, fertilizer and agrochemicals used were the drivers of technical efficiency among both categories of farmers, while costs of land, fertilizer and family labour were the drivers of allocative efficiency. Technical efficiency estimates for both categories of farmers were 0.79 and 0.71 respectively and respective allocative efficiency estimates were 1.22 and 1.44. Mean comparison of the technical efficiency levels indicated a t-estimate of 2.52 (α= 0.0124) in favour of the beneficiaries while a t-estimate of -24.56 (α= 0.000) indicated that beneficiaries were also more allocatively efficient.
 Conclusion: The beneficiaries, by acquiring skills and supports from Fadama III, became were more efficient than their non-benefiting counterparts. Continuous training will assist farmers to improve their efficiencies and reduce the noticed deficits.

Effects of Mechanization and Investments on the Technical Efficiency of Cassava Farms in Cambodia

Cassava is one of the most important cash crops in Cambodia. Agricultural mechanization promotes productivity, but overinvestment may disrupt the balance between inputs and outputs. Depending on the production scale, sometimes hiring equipment is considered better than purchasing it. While we can hypothesize that mechanization and investments might be crucial factors of productivity, technical efficiency analysis for estimating their effects has not yet been conducted. Therefore, this study investigates the impact of mechanization and investments on cassava yield and producers’ technical efficiency in Cambodia using the Cobb-Douglas stochastic frontier production model. For the study, 205 respondents were randomly selected and interviewed in the Battambang and Pailin provinces in northwestern Cambodia in 2017. Our results show that tractor or truck-hire cost was positively significant, and the cassava uprooting machine-hire cost was negatively significant. The average technical efficiency score of 0.62 indicates that cassava producers can increase their level of technical efficiency. Although cassava production in Cambodia is mechanized and investors are investing, it would be more beneficial to producers if they were provided with financial assistance when uprooting the cassava at the harvest time. Appropriate control of input costs can effectively improve cassava yield, following the implementation of the National Policy on Cassava 2020–2025 by the Royal Government of Cambodia.

Determinants of technical efficiency among lowland rice farmers in Enugu State, Nigeria: a stochastic frontier production function approach

The study examined the determinants of technical efficiency among lowland rice farmers in Enugu State, Nigeria. Primary data were sourced from rice producers through the use of well designed questionnaires. The study was conducted in four agricultural zones of Enugu State, during the 2017/2018 cropping season. Multistage and simple random sampling technique was employed to select 300 sampled rice farmers for the study. Cobb-Douglas stochastic production frontier function was used for the analysis.The result revealed that (98%)of random variation in the output of farmers was because of their inefficiency in their use of productive inputs in the study area. .Apart from farm size with estimated coefficient of (0.0531), fertilizer (0.0329), seed (0.2319), labour (0.0804) and agro-chemical (0.1711) were underutilized by the rice farmers. The average technical efficiency for the farmers was 0.71 implying that, on the average, the respondents are able to obtain 71% of potential output from a given mixture of production inputs. Thus, in a short run, there is a minimal scope (29%) of increasing the efficiency, by adopting the technology and techniques used by the most technically efficient farmer. High cost of inputs (MS=3.69), bad roads (MS=3.67), poor credit accessibility (MS=3.40) and inadequate storage facilities (MS꞊2.90) were found to be the major constraints of the rice farmers. The study recommends that in order to improve efficiency of resource use by the farmers in the study area, more of labour, seed, fertilizer and agro-chemicals should be utilized.

Determinants of inefficiency in shrimp aquaculture under environmental impacts: Comparing shrimp production systems in the Mekong, Vietnam

AbstractShrimp aquaculture systems vary from primitive (extensive/improved extensive) to more industrialized (intensive/semi‐intensive) farms, and the impacts of environmental shocks may differ between them. This article applies the Cobb–Douglas stochastic production frontier function to evaluate the determinants that impact the inefficiency of these intensive and extensive systems in Vietnam. Data is from a survey of 436 white‐leg shrimp (Litopenaeus vannamei) farms in the Mekong Area. Our findings show that farmers with self‐reported experiences of drought have higher production efficiency, while experiences of irregular weather reduce efficiency. In addition, education and feeding practice/stocking density adjustment measures increase extensive efficiency. Furthermore, longer crop duration impacts the two systems differently, increasing intensive farm efficiency but decreasing extensive farm efficiency. Interestingly the efficiency effects differ for the two technologies, with two exceptions; efficiency increases for both locations further from the sea and decreases with disease occurrence.

Cassava Production Efficiency in Southern Ethiopia: The Parametric Model Analysis

Due to capital constraints and land scarcity in developing countries, introducing new technology to boost productivity is difficult. As a result, working to improve cassava production efficiency is the best option available. Cassava is increasingly being used as a food source as well as an industrial raw material in the production of economic goods. This study estimates cassava production efficiency and investigates the causes of inefficiency in southern Ethiopia. Cross-sectional data from 158 households were collected using a systematic questionnaire. The Cobb-Douglas (CDs) stochastic frontier production model was used to calculate production efficiency levels. The computed mean result showed technical efficiency (TE), allocative efficiency (AE), and economic efficiency (EE) levels of 74, 90, and 66%, respectively. This demonstrated that existing farm resources could increase average production efficiency by 26, 10, and 34%, respectively. The study found that land size, urea fertilizer application, and cassava planting cut all had a positive and significant effect on cassava production. It was discovered that TE was more important than AE as a source of benefit for EE. Inefficiency effects modeled using the two-limit Tobit model revealed that household head age, level of education, cassava variety, extension contact, rural credit, off-farm activities involvement to generate income, and farm size were the most important factors for improving TE, AE, and EE efficiencies. As a result, policymakers in government should consider these factors when addressing inefficiencies in cassava production. It is especially important to provide appropriate agricultural knowledge through short-term training, to provide farmers with access to formal education, to access improved cassava varieties, and to support agricultural extension services.

Technical Efficiency of Lobster (Panulirus sp) Farming in East Lombok Regency

East Lombok Regency is one of the centers for the development of aquaculture and the largest lobster seed producer in Indonesia. However, in terms of productivity, lobster cultivation is still relatively low due to the less optimal use of production factors and management in carrying out lobster rearing cultivation. The purpose of this study was to analyze the factors that affect the production of lobster rearing aquaculture and to analyze the level of technical efficiency and the factors that influence the technical inefficiency of lobster rearing aquaculture in East Lombok Regency. Descriptive research method was selected in this research. Cross section data was collected using a survey technique on 40 respondents who were selected by simple random sampling. The collected data was then analyzed using the Cobb-Douglas Stochastic Frontier production function with the Maximum Likelihood Estimator (MLE) method. The results showed that the production of lobster rearing aquaculture in East Lombok Regency was significantly influenced at the alpha level 5% by the variables of the number of cages, feed, number of family dependents and dummy species. The level of technical efficiency of lobster rearing cultivation is classified as efficient with a technical efficiency value of 0.94. Then the factors that affect the inefficiency of lobster rearing business in East Lombok Regency include age, education level and training dummy.