Model For Technical Inefficiency Effects Research Articles

Technical efficiency of early variety country bean cultivation in selected areas of Bangladesh: a stochastic frontier approach

The present study was undertaken to measure the profitability and technical efficiency of early variety country bean cultivation in selected areas of Chatmohar upazila of Pabna district. A total of 60 early variety country bean-growing farmers were selected from three villages of Chatmohar upazila using a simple random sampling technique. Stochastic frontier production function was applied to determine the technical efficiency of the country bean growers. Technical inefficiency effects model was also applied to identify the demographic and socio-economic factors by which inefficiency effects are influenced. The study revealed that Benefit Cost Ratio (BCR) was the highest (2.29) for large farmers followed by medium (2.27) and small farmers (2.21). The result of the Maximum Likelihood Estimates (MLE) showed that human labor, fencing and manure had significant positive impact whereas the irrigation and insecticides had a negative impact on the production of country bean. The results of technical inefficiency effect model showed that farmer’s age, farm size had negative impact while education, family size and farm credit had positive impact on technical efficiency. The inefficiency analysis results indicated that farm level technical efficiency ranged between 43.06% and 98.01% with a mean technical efficiency of 91.9% implied that there was potential to increase country bean production among smallholder farmers in the study area by 8.1% through efficient use of present technology. The main constraints to country bean (early variety) production were identified as- infestation of pest and disease, high price of inputs, paucity of quality seed and fertilizer, scarcity of human labor, lack of technical knowledge, limited access to institutional credit etc. Despite the constraints, there is a great prospect of early variety country bean production in the study areas. Country bean (early variety) production could be increased in a sustainable manner if farmers would be provided with government support regarding lower price of input, fair price of output, marketing facilities, training for farmers and farm credit at low interest rate, reducing the activities of syndicate of middlemen. Government should provide necessary support to the farmers for ensuring sustainable production of early varieties of country bean. Res. Agric. Livest. Fish. Vol. 10, No. 2, August 2023: 155-164

Resource Use Efficiency and Cleaner Agricultural Production: An Application of Technical Inefficiency Effects Model for Paddy Producing Zones of West Bengal

It is possible to enhancement of agricultural productivity with environmental sustainability through efficient utilization of resources. This hypothesis is examined by the efficiency and the responsible factors for controlling inefficiency of the farms. The empirical analyses are conducted based on the secondary data of 14 960 farms scattered into five different paddy producing zones of West Bengal, India. The Efficiency estimates disclose that clayey soil texture zone is the most efficient and sandy and gravelly soil texture zone is the least efficient concerning paddy production. The study concludes with appropriate policy implications that the inefficiency on the part of the farms is caused by inefficient utilization of the chemical fertilizers, viz., nitrogen and potassium and insecticides and by the efficient utilization of this the farm can increase its productivity with environmental sustainability.

Efficiency of Pineapple Production and its Determinants: A Case Study of Manipur

The study was conducted in the hills and valley regions of Manipur with the objectives of assessing the level of technical efficiency and determining the factors influencing the technical inefficiency of pineapple production in the state during the year 2022-23. A total of 240 farmers were interviewed in person to gather primary data. A stochastic frontier technique was used in the study to achieve the stated objectives. Results showed that pineapple production was a profitable business. However, the study’s efficiency score of 0.603 indicated that farmers were operating inefficiently. The estimated stochastic production frontier model showed an adverse association between the cost of the sapling, transportation, fertilizer, and manure to the efficiency of pineapple production. According to the technical inefficiency effect model, the only factors that positively explained the technical inefficiency in pineapple production were the farmers’ age and household size while factors like education, years of farming experience, credit availability, and contact with extension agents had a negative effect. Therefore, the study concludes that attracting youth in agriculture, extension services, and production inputs availability has to give due attention to augment the effectiveness of pineapple production across the state and nation as a whole.

Women's political leadership and efficiency in reducing COVID-19 death rate: An application of technical inefficiency effects model across Indian states

Evidence from earlier studies on COVID-19 suggests that the countries led by female leaders were more successful in handling the COVID-19. India being a patrilocal society evident that women's political autonomy in the Gram Panchayat does miracles concerning development. With this backdrop, the present paper aims to explore the role of women's political participation and leadership on the efficiency in reducing the COVID-19 death rate for Indian states. This predominantly empirical paper is entirely based on secondary data compiled from different sources. The empirical analysis of the paper is facilitated by the utilization of the Technical Inefficiency Effects model within the framework of Stochastic Production Frontier. The empirical results accredit us to conclude that the efficiency of the Indian states in reducing the COVID-19 death rate is highly influenced by female political participation and leadership, digitalization, urbanization, and literacy rate. The study ends with suitable policy prescriptions.

Efficiency Analysis of Lignite Mining Operations Using Production Stochastic Frontier Modeling

This paper proposes a stochastic frontier model for measuring both technical and environmental performance at the mine level by using a translog production function. The Kardia Field opencast lignite mine of the Greek Public Power Corporation (PPC), S.A. is the topic of the case study. Efficiency ratings are derived over a long period of time using annual operating data, and in addition, the determinants of inefficiency are established by means of the technical inefficiency effects model. In the light of the results, there is a strong correlation between technical and environmental efficiency; the results are validated by those produced by data envelopment analysis (DEA). In addition, the stripping ratio is identified as the statistically significant determinant of performance. The proposed framework could be used as an instrument to measure the efficiency of lignite mining operations and to identify the drivers of performance.

Technical Efficiency Analysis of Pineapple Production at Madhupur Upazila of Tangail District, Bangladesh

The main objective of this study is to analyse the technical efficiency and its determinants of pineapple production at Madhupur upazila of Tangail district in Bangladesh. Cross-section data from a sample of 100 pineapple producers during the 2016-17 cropping season were collected by applying multistage random sampling technique. Farm specific technical efficiency scores were estimated using the Cobb-Douglas stochastic frontier production function approach. Empirical findings show that the estimated technical efficiencies of the sampled farmers’ range from 61.61% to 99.95% with the mean technical efficiency of 91.14%. The result suggests that, on an average, farmers in the study area can potentially increase their productivity by 8.86% through more efficient use of inputs. The estimated stochastic production frontier model indicates that input variables such as area, tillage cost, seedling cost and human labour cost were statistically significant variables to increase the quantity of pineapple production. Technical inefficiency effect model identifies that age of farmers had significant positive, but years of schooling and extension contact had significant negative effect on farmers’ inefficiency. The study therefore recommends that government should focus on the ways of attracting and encouraging the youths as they are more efficient and are likely to be able to properly allocate resources and are willing to adopt new technical innovations. Besides, policies and strategies should be directed towards increasing farmers’ formal as well as informal education through the implementation of effective training programmes by the well-trained extension workers.

An Estimation of Technical Efficiency of Tea Smallholdings in Ratnapura District of Sri Lanka

While accepting the fact that the tea smallholdings sector of Sri Lanka immensely contribute to the annual tea output of the economy, the sector still faces various deficiencies due to problems pertaining to input related issues. Measuring the level of efficiency and identifying the factors which are attributed to inefficiency are in utmost importance in introducing remedies for that. A cross sectional survey was conducted on a sample of tea smallholders in Ratnapura district where highest contribution to the total tea production of the country is made. In this study, the Cobb-Douglas Stochastic production frontier model was used by incorporating the technical inefficiency effect model to estimate the level of technical efficiency in tea smallholdings sector. The study revealed that average technical efficiency of tea smallholdings sector in the study area was 87.36 percent that keeps a margin of 12.64 percent for further improvements through better use of available resources and technology. The results of the Cobb-Douglas model revealed that the estimated coefficients of land, labor and fertilizer are positively and significantly affect the green leaves production of the sector. The findings of the inefficiency model disclosed that age, farming experience, level of education, occupation, age of tea plants, farming group membership and credit access have significant negative impact on technical inefficiency

Performance analysis of electricity distribution sector post the implementation of electricity act 2003: empirical evidence from India

PurposeThe objective of the present study is to evaluate and analyse the performance of Indian electricity distribution utilities post the implementation of landmark Electricity Act 2003.Design/methodology/approachStochastic frontier analysis (SFA) that incorporates exogenous influences on operational efficiency is adopted in the present study. Specifically, a stochastic frontier production function model with a technical inefficiency effects model (Battese and Coelli, 1995) is chosen as a preferred model. In this model, the function that explains the inefficiency scores is estimated in a single stage with the production technology. This avoids the problem of inconsistency which is possible in the two-stage approach.FindingsThe sample involved 52 Indian electricity distribution utilities for seven-year period from 2006 to 2013. Major findings of SFA show that Indian electricity distribution utilities post the implementation of Electricity Act (2003) had, on average, experienced efficiency improvement during the observed period. The overall mean technical effciency score is estimated as 78.5% which indicates that there exist wide scope for effciency improvement in the sector. Further, the empirical findings also indicate that publicly owned distribution utilities obtain average technical efficiencies of 71.3%, which is lower than privately owned distribution utilities, which achieve average technical efficiencies of 85.7%.Research limitations/implicationsPower supply quality indicators such as SAIFI, SAIDI, CAIFI, etc. and unobserved heterogeneity also influence the efficiency analysis of electricity distribution utilities. Hence, these parameters as explanatory variables can be incorporated in the future work.Practical implicationsThe results obtained from this empirical study would likely be helpful for utility managers and policymakers to know how well they are performing, and how a better corporate strategy a particular utility can formulate to improve its operational efficiency and also its position in the marketplace.Originality/valueThis paper is amongst the first significant attempts that implement SFA approach to the panel dataset over a longer period of time – 2006 to 2013, so, as to evaluate and analyse the operational efficiency of Indian electricity distribution utilities in a single framework after the enactment of Electricity Act (2003). Unlike previous studies, this study investigates the degree to which various exogenous (or environmental) factors influence efficiency levels in these utilities.

Efficient Management of Farm Resources and Food Consumption Level of Pond Fishers in North-Central Bangladesh

Aims: The study was conducted to assess the efficient management of farm resources of pond fish farmers and level of their household food consumption in order to deal with sustainable development of pond culture system and food security issue.
 Study Design: Three unions out of 9 in Melandah upazila of Jamalpur district were selected, as a large number of ponds are available. Sixty fish farmers were randomly selected from the population of 200. Data were collected using a structured questionnaire during January to March 2017.
 Methods: Cobb-Douglas stochastic frontier production function and technical inefficiency effect model were used to assess efficient management of farm resources. Also, multiple regression models in double-log forms were employed to determine the factors influencing households’ per capita food consumption, calorie intake and protein intake.
 Results: Gross return and net profit were $8,081 and $2,262 respectively and cost benefit ratio was 1.39. Technical inefficiency estimates show that farmers’ education (0.0009) and training (0.0042) had insignificant but positive sign for fish production. Experience (-0.0083) and culture period (-0.0054) had significant and negative sign and age of farmers has insignificant negative sign indicated that technical efficiency increased with the increase in experience and fish culture period. The mean efficiency was 0.92 in fish farming indicates 8% of fish production could be increased with the existing resources and available technology. Per capita per day food consumption was 1288.36 g, calorie intake 2592.23 k. calorie and protein intake 84.27 gram.
 Conclusion: A linkage between Upazila Fisheries Officer, Bangladesh Fisheries Research Institute, fisheries extension workers and pond fish farmers should be established. Calorie and protein intake of the farm households is higher due to increase of food sufficiency of the country and buying capacity of the farmers but the nutritional wellbeing of them is still low.

Diversification, efficiency and productivity in catch share fisheries

This study investigates the relationship between diversification, technical efficiency (TE), and productivity in the US Gulf of Mexico commercial red snapper fishery. We estimated a vessel-level input-oriented stochastic distance frontier simultaneously with a technical inefficiency effects model using a 20-year unbalanced panel (1997–2016). The panel documented the fishing activities of 1,255 fishing vessels, 10 years before and after the adoption of the red snapper catch share program in 2007. Our study points to the desirability of diversification in catch share fisheries. It shows that red snapper fishers who diversified their fishing portfolio tended to be more productive and technically efficient. The study found evidence that diversification resulted in cost savings from catching multiple species (diversification economies), and that the productivity of the fleet increased (diversification efficiencies). The analysis also showed that the TE of the fleet increased in the catch share period. The average TE rose from 0.78 in the command and control period to 0.85 in the catch share period. Higher TE scores were associated with higher levels of diversification. Our results suggest that policies that encourage diversification such as reducing quota ownership caps, adjusting quota carryover provisions, and providing governmental assistance to increase participation in other fisheries deserve further attention.

Non-Parametric Approach towards Smallholders Rubber Production Efficiency: A Two-Stage Data Envelopment Analysis (DEA)

In South Sumatra, Indonesia, the productivity of smallholders’ rubber is lower than the productivity of private and government estates. The productivity of Indonesian smallholders’ rubber can be enhanced through intensification or technology improvement. The main objective of this study is to estimate the technical efficiency level and technical inefficiency effect model of smallholder’s rubber in South Sumatra. A survey was conducted from November 2016 to March 2017 in 11 districts in the South Sumatra Province. 384 rubber farmers were selected using a combination of purposive, multi-stage and random sampling techniques. This study employed a non-parametric approach (Two-stage DEA) using cross-sectional data to understand the rubber production process. The findings showed that the mean technical efficiency of the sampled farms under the VRS DEA was estimated at 0.80. However, the mean technical efficiency was still less than 0.82, indicating that on average, the sampled farms were not technically efficient. Tobit regression results showed that all of the determinants have the expected signs (negative) in relation to technical inefficiency, thus implying that these factors increase technical efficiency as expected. However, only two of the determinants, farming experience and tapping system were statistically significant to the level of technical efficiency.

Batik SMEs Efficiency and Entrepreneurship Role in Innovation

In the long term, batik SMEs to compete in the local and global markets can not only rely on production capabilities rooted in local sources of uniqueness, but must have efficiency of economies scale for resource access and innovation. In a competitive environment, entrepreneurs in the batik industry have an important role to improve the efficiency. This study analyzed the role of entrepreneurs in the economic efficiency. This study applies production model to describe the entrepreneurs role on economic efficiency. The study was conducted by interviews to 100 Batik SMEs managers-owners in the Batik Centre in Solo, Pekalongan and Rembang. The entrepreneurs role in innovation in term of product innovation, marketing innovation, and business alliances (cooperatives). Data analysis was performed using Stochastic Frontier and Deterministic Regression Analysis. The empirical results of the technical inefficiency effects model suggest that the entrepreneurs role in product innovation, marketing innovation and business alliances are important factors affecting economic efficiency of batik SMEs. The role of entrepreneurship in marketing innovation has the highest elasticity of the production and sales of batik, and then followed by the role of entrepreneurs in new product innovation and business alliances.

Resource Use Efficiency as a Climate Smart Approach: Case of Smallholder Maize Farmers in Nyando, Kenya

To simultaneously enhance agricultural productivity and lower negative impacts on the environment, food systems need to be much more efficient in using resources such as land, water, and fertilizer. This study examines resource use efficiency of maize production among smallholder farmers in Nyando, Kenya. The main objective is to assess the degree of technical efficiency of smallholder farmers and identify the impact of so-called “climate smart practices” on technical efficiency. The method of Stochastic Frontier Analysis is used to simultaneously estimate a stochastic production frontier and a technical inefficiency effect model. Data for 324 subplots farmed by 170 households were available for this analysis. The study reveals that maize production in Nyando is associated with mean technical efficiency of 45% and that soil conservation practices such as residue management, legume intercropping, and improved varieties significantly increase farmers’ technical efficiency. Soil carbon is found to be a critical factor of production. These results imply that there is potential to more than double production using the same resources and that soil conservation practices can be very “climate smart,” at once increasing soil carbon, production, climate resilience, and technical efficiency.

Technical Efficiency of the Setbag Net Fishery in Bangladesh: An Application of a Stochastic Production Frontier Model

A study was conducted to examine the technical efficiency for Setbag net fishing boats operated in the year 2014. A total of 100 samples of Setbag net fishing boats were selected, of which 40 were from Cox’s Bazar, 40 were from Chittagong and 20 were from Bagerhat. Stochastic frontier (with technical inefficiency effect) model was specified and estimated. Results have shown that the estimated mean technical efficiency of Setbag net fishing boats is 84 percent. The efficiency of Setbag net fishing boat was positively associated with total cost, while the number of nets were negatively related to fishing day and crew size. Head maji’s age had significant effect on inefficiency at 5% level. Although, the effect on boats’ efficiency was positive, (though insignificant) for head maji’s experience, head maji’s education, engine horse power and boat age. The use of modern fishing boat and improved fishing technology should be promoted, through proper training and motivation program for fisher. At the same time old and unfit fishing boat and gears should be gradually removed and replaced by new and modern fishing boat.The Agriculturists 2017; 15(2) 59-65

Assessment of technical efficiency of open shed broiler farms: The case study of Khyber Pakhtunkhwa province Pakistan

Abstract Efficient use of inputs is very essential for broiler farmers to get the maximum possible output for enhancing productivity and ultimately profit of the farm. This study estimated and assessed technical efficiency of broiler farms in district Charsadda of Khyber Paktunkhwa province, Pakistan. In order to achieve the aforesaid objective, multistage random sampling technique was used to collect data from 120 broiler farms. Parametric approach (Stochastic frontier) was employed for analysis of data. Contrary to non-parametric approach, parametric approach entangle modeling cost/production frontier using various econometric techniques. The underlying principle behind the parametric approaches such as Stochastic frontier approach is that it accounts for random error (factors outside the scope of the farmers which affect production cost) and separate the inefficiency component from it and make credible statistical inferences and also the parametric approach has not received any valid criticism since its introduction. Stochastic frontier production function of Cobb- Douglas type was utilized for the estimation. The function was estimated using Maximum Likelihood estimation technique. The results revealed that mean technical efficiency of broiler farms was 0.85 ranging from 0.61 to 0.99, implies that an average farm could produce 14% more output for given level of inputs if they become technically more efficient. The estimated coefficient of the number of day old chicks and feed were 0.45 and 0.21 and statistically significant at 1% and 5% level of significance, respectively. In technical inefficiency effect model, the estimated parameters of age, experience, credit, occupation and labor used were negative and statistically significant. It is suggested that according to the capacity of shed the broiler farms need to increase the number of day old chicks as wells as feed to enhance productivity. Provision of training facilities to the farmers, appropriate to rearing of broilers in open shed farms is a good option for efficient utilization of resources and enhancing efficiency. Provision of credit facilities to broiler farms on easy terms and conditions for purchase of day old chicks, feed, labors and other inputs involved in broiler farming will boost up broiler productivity and efficiency of farmers.

Measuring the Impact of Socio-Economic Factors on School Efficiency in Australia

This paper examines the productive efficiency of government schools in New South Wales (NSW) in Australia. The study uses a technical inefficiency effects model applied to a unique three-year panel dataset containing 1235 primary and 371 secondary schools in NSW. A stochastic frontier production function and an inefficiency effects function that control for school socioeconomic and environmental factors are estimated. The dataset contains information on various school inputs, school expenditures by major functional area, parental socioeconomic characteristics, student characteristics, and standardized test scores. We examine the degree to which school and non-school educational inputs influence student achievement scores and find that, overall, primary schools are 88.6% and secondary schools 96.4% efficient. The index describing community socio-educational advantage has the most significant influence on students’ achievement scores.

Impact of all-inclusive packages on hotel efficiency

In the last decade, all-inclusive packages have had an extraordinary boom in one of the most popular sun and beach tourism destinations in Europe, the Canary Islands. This fact reinvigorated the debate on potential benefits and negative effects on the local economy. However, there is no empirical evidence of the impact that all-inclusive packages may have on the efficiency in the hotel industry. This study assessed the effects of all-inclusive packages on cost and profit efficiency using the stochastic frontier approach and the model proposed by Battese and Coelli [(1995). A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics, 20(2), 325–332] in a sample composed of 102 hotels of the Canary Islands from 2008 to 2014. The empirical results revealed that the hotels that offered all-inclusive packages exhibited lower efficiency levels than those hotels that did not provide this service. These results have important implications for both public policies and hotel management.

A Stochastic Frontier Analysis of Exporting Small and Medium Sized Enterprises in India

This study employs a stochastic frontier analysis (SFA) and technical inefficiency effects model to predict the technical efficiency of 3,168 Indian manufacturing and exporting SMEs, analyze their returns to scale and key factors impacting on their technical efficiency. Indian manufacturing and exporting SMEs extensively rely on labor rather than capital to increase their output, including almost all exporting SME groups, except those exporting to North & South America. The production of Indian manufacturing SMEs exporting to Oceania, however, has increasing returns to scale (1.1965). The inefficiency effects model reveals that firm size, firm age, foreign ownership, location and government assistance are firm-specific factors that significantly affect the technical inefficiency of production. Finally, evidence-based policies are also provided to facilitate improvement in the technical efficiency performance of Indian manufacturing and exporting SMEs.

Technical efficiency of fenugreek production in the semi arid region of Rajasthan, India: A stochastic frontier approach

This paper examines the technical efficiency of fenugreek production in Rajasthan and also identifies key variables affecting technical efficiency using primary data collected from 120 randomly selected fenugreek cultivating farmers by applying a stochastic frontier analysis (SFA). The results obtained in an empirical model indicated that mean technical efficiency of all categories of farmers was 70%. This suggests that still there is scope for increasing the output by 30% with the same level of input uses. Small farmers were found to be more efficient in terms of judicious and timely application of irrigation and fertilizers as well as reaping more yields. Around 50% of the farmers attained a technical efficiency more than 80% because of employing the uniform cultivation practices. The results of the technical inefficiency effects model suggest that age, education and contact with extension agencies positively influenced technical efficiency of fenugreek cultivation. Key words: Cobb-Douglas production function, fenugreek cultivation, semi-arid region, stochastic frontier analysis (SFA), technical efficiency.

The efficiency of SMEs in Thai manufacturing: A stochastic frontier analysis

This study examines the technical efficiency of Thai manufacturing SMEs and their firm-specific determinants utilising firm-level industrial census data for 1997 and 2007. Results from a stochastic frontier production function and technical inefficiency effects model reveal that Thai SMEs are overwhelmingly labour intensive with low average technical efficiency in both years. Results also indicate that firm size, firm age, skilled labour, location, type of firm ownership, government assistance, foreign investment and export activity are important firm-specific factors contributing to the technical efficiency of SMEs. Specific policies are warranted to improve Thai SMEs. These policy measures include: easier access to financial services, access to skilled labour, training of the workforce and entrepreneurs, addressing location and regional capacity inequities, encouraging foreign investment for operational synergies and export incentives for penetration in the world market.