Stochastic Frontier Production Function Analysis Research Articles

Technical efficiency of factors affecting soybean farming in Tanjab Timur Regency

This research was carried out with the aim of: Knowing the general description of soybean farming in Tanjab Timur Regency, Analyzing the level of technical efficiency of soybean farming in Tanjab Timur Regency, Analyzing the level of technical inefficiency of soybean farming in Tanjab Timur Regency. The analytical tool used is Stochastic Frontier production function analysis with Cobb- Douglas and calculating the level of efficiency and inefficiency. This research was conducted in Tanjab Timur Regency. The sampling technique was the census method with a sample of 120 farmers. The data used is secondary and primary data. The research results showed that: The condition of the land in the research area is tidal land with an average production of 1,039, The use of production inputs in the research area is technically efficient, reaching 0.767. Socio-economic factors such as age and education variables have no real effect and increase inefficiency while experience variables, number of family members and extension have no real effect, but increase technical efficiency or reduce inefficiency, Simultaneously or partially age, education, experience, number of family members and extension has no real effect on production.

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.

Evaluation of technical, allocative and economic Efficiencies of rubber-cassava based farming system In edo state, nigeria

This paper evaluated the technical, allocative and economic efficiency of rubber- cassava intercrop system among smallholder rubber farmers in Edo Sate Nigeria through a survey of 160 rubber farmers in a multi stage purposive and simple random sampling techniques. Data collected were analyzed using budgetary techniques and stochastic frontier production function analysis. Budgetary analysis reveals an average total cos/ha of 93350. S583.44) with N169,560 (S1,059.75) accrues to the farmer as revenue and N76210(S476.31) as gross margin with a net farm income of N70,710(S441.94). The rate of return and return per capital invested were N1.82 and N0.82 showing both viability and profitability of rubber- cassava farming. The Maximum Likelihood Estimate (MLE) of the parameters of the stochastic frontier production function of the sampled farmers revealed that planting materials, agrochemicals, labour and farm size were significantly related with cassava output. The mean technical efficiency (TE) of respondents' was 0.82 with the scope of improving their efficiency by 18%. Education and extension contact were the significant factors that increase the technical efficiency of farmers. The estimates of the parameters of stochastic cost frontier also showed that the cost of planting materials, agrochemicals, depreciation, cost of labour and output were significantly related with cost of production with mean allocative efficiency (AE) of 0.67. Age, education, farming experience and extension contact enhance the allocative efficiency of rubber farmers. The economic efficiency index ranged from 0.18 to 0.85 with the mean of 0.55 indicating wide differentials between the least and efficient farmer with the scope of improving economic efficiency among rubber farmers by 45% in the short-run. Recommendations to improve efficient allocation of resources in a rubber cassava based farming system have been made in the study in the study.

The Efficiency of Hard Wood Industry in Ondo State, Nigeria

Wood furniture industry is an important manufacturing sector in Nigeria for its significant contributions to the growth of national economy and industrialization as well as livelihood of the furniture makers. Therefore, evaluating efficiency of hard wood industry is important to provide useful information about the business to the furniture makers and to assist the policy makers to design appropriate policies in supporting furniture production in Nigeria. The specific objectives of this research were to describe socio-economic characteristics of furniture makers, estimate efficiency of furniture makers, determine the profitability of furniture production, identify factors influencing efficiency of furniture making and examine the problems associated with furniture makings in the study area. The study adopted a multistage sampling procedure. Data were collected from seventy furniture makers through a well-structured questionnaire. Descriptive statistics, budgetary analysis, Cobb Douglas stochastic frontier production function, inefficiency model and relative importance index were used to analyze the data. The findings revealed that 75.7% of the respondents obtained some levels of formal education; 4.3% of the furniture makers were single; 71.4% had no access to credit facility; and 7.1% exported their products beyond the boundary of Nigeria. The estimated gross margin and net profit of #7,041,255.09 (US $16,959.52) and #4,261,542.89 (US $10,264.33) respectively revealed that furniture production is profitable. The efficiency results showed that 27% of furniture makers were most technically efficient; 5.7% of them were most allocative efficient; and 10% of them were most economically efficient. Stochastic frontier production function analysis showed that firm size, labour and fixed assets had a positively significant influence on furniture production. The only identified socio-economic characteristics of furniture makers that had significant influence on efficiency of furniture production were educational level, operating experience and reinforcement training in the study area. The two critical constraints facing furniture making in the ranking scale were fluctuation of wood price and inadequacy of funds.

DETERMINANTS OF TECHNICAL EFFICIENCY AND PROFITABILITY OF ANCHOR BORROWER MAIZE FARMERS IN GOMBE STATE, NIGERIA

The study assessed the impact of anchor borrowers program on crop production in Gombe State, Nigeria. A total of 150 beneficiary farmers were sampled across the State and questionnaire were administered via scheduled interview using multi-stage, cluster, purposive and simple random sampling methods. The data collected were analyzed using stochastic frontier production function and gross margin analysis. The result on the socioeconomic characteristics revealed that most of the respondents were male (80.67%), married (79.33%) and experienced maize farmers (76.00%). The respondents were technically efficient with a mean level of 72.00% and sum of the elasticity estimates was found to be 2.1625 indicating increasing return to scale, the inefficiency parameters conformed to the a priori expectation having carried the expected negative signs. Sigma squared (σ2) was statistically significant at p <0.001. Gamma (γ) was found to be 0.89 and was significant at p <0.001. The study further revealed that maize farming in the area was profitable with a gross margin of ₦87,010.34/ha. The total revenue recorded was ₦267,543.12/ha, while the total variable costs was ₦180,532.78/ha over a total land area of 981.3ha. Profitability index was 0.33 and return on investment was 0.48. There was a moderate availability and accessibility to credit and inputs. Major constraints encountered include; untimely access to loan, bad road network, high cost of fertilizer and labor. It can therefore, be deduced that the program had triggered more farmers into production, even though their technical efficiency was below optimum likely owing to constraints associated with; access to credit and input, and also poor access to extension services. It was recommended that an effective extension service be put in place. Inputs and credit should be disbursed timely and monitoring mechanism should also be improved so as to reduce the tendencies of misappropriating resources meant for maize production to other personal needs.

Technical efficiency and profitability of small holder natural rubber production in southern Nigeria

The study measured the technical efficiency and profitability of small holder natural rubber production in southern Nigeria by examining the socio-economic characteristics of respondents, the profitability of latex production and technical efficiency. Multi-stage, purposive and random sampling techniques were employed in the collection of primary data from 300 respondents. Descriptive statistics and stochastic frontier production function were used to analyse the data collected. Results indicated that respondents were educated, married (76%) with a mean family size of seven people and well experienced mean farming experience of 19 years. Latex production was a profitable venture with an average variable cost per ha of 55,700.94 with total revenue (T.R.) and gross margin (G.M.) per hectare 163,594.17 and 107,893.23, respectively. Furthermore, the stochastic frontier production function analysis showed the number of trees per task, labour, farm size and age of plantation, clone, wage and fixed cost items were significantly related to rubber latex. The mean technical efficiency (T.E.) of the respondents was 0.84. Education, extension contact and experience were the significant factors that increased the technical efficiency of the respondents. The resuscitation of extension activities of A.D.P.s in the rubber growing states of the country through adequate funding by the government to improve the efficiencies of farmers, use of improved planting materials during replanting old plantations and the formation of cooperative societies by farmers to enhance access to production credit amongst others are recommended in the study.

Economic efficiency of goat farming in cauvery delta zone of Tamil Nadu

A study was conducted to analyse the economic and technical efficiency of goat farming in Cauvery Delta zone of Tamil Nadu, India. The primary data were collected by interviewing 180 goat farmers selected by multi-stage random sampling using pre-tested interview schedules during January to April 2017. The sample comprised of 87 small farmers (<5 goats), 78 medium farmers (6 to 15 goats) and 15 large farmers (>15 goats). The total fixed investments for goat farming were Rs. 14055.16 (small farmer), Rs. 29136.40 (medium farmer) and Rs. 70826.60 (large farmer). The total gross returns per farm for the above categories were Rs. 6241.94, Rs. 9607.04 and Rs. 12910.11, respectively. Overall, goat farming yielded a total return and net return of Rs. 10496.38 and Rs. 6248.92 per farm per annum, respectively. The break-even analysis revealed that small farmers required to produce 20.60 kg of chevon annually to reach break-even point, 51.02 kg and 222.96 kg by medium and large farmers, respectively. The ratio of marginal value product (MVP) to marginal factor cost (MFC) for flock size, labour charges, medicine and vaccination charges were more than unity in all the categories of the farms, which indicated under-utilization of resources. The stochastic frontier production function analysis revealed that labour charges had significant (p<0.01) positive influence on the chevon production in all categories of farms. The average technical efficiencies were 74.65,83.41,86.54 and 80.36% in small, medium, large and overall categories of farms respectively. The sub-optimal technical and resource use efficiency warrants scientific management practices among goatfarmers.

Economic efficiency of fish farming in ondo state, nigeria

This study assessed economic efficiency of fish farming in Ondo State, Nigeria. The study used primary and secondary data to achieve the objective of the study. Primary data were collected with the aid of structured questionnaire from 72 Fish farmers selected using the multistage sampling technique. The analytical technique involved budgeting technique, stochastic frontier production and cost function analysis. The study discovered from the gross margin and net-revenue analysis that fish production was profitable judging by the positive value and size of the gross margin (₦175.55 per kg) and net revenue (₦170.96 per kg). The result of the stochastic frontier production function analysis showed that all the regressors used in the analysis had positive coefficient, indicating that allthe inputs considered had direct relationship with farmers output. The result of the stochastic cost frontier function analysis showed that unit cost of labour, fingerlings, fertilizer and lime had positive regression coefficients, indicating that as these variables increase,the overall production cost of fish increases. The result also indicated that the presence of technical inefficiency had effects on fish production as depicted by the significant estimated gamma coefficient. The study recommends improvement in human capital development through education policy and training programme by extension education, opening of more market opportunities should be pursued and government should provide support to fish farmer’s cooperative society by increasing their capital base.

An analysis of technical efficiency and factors affecting rice farming business production in Bombana regency, Southeast Sulawesi

This study aims to (1) analyze the factors affecting production of rice farming business in Bombana Regency, (2) analyze the extent of technical efficiency of rice farming business in the Regency. The study was conducted from April to October 2019. Bombana was considered as the area in which the study took place because most of the people were rice farmers and they were potential to develop. There were 120 rice farmers participated in the study. The samples were taken using simple random sampling. Primary data were collected by interview based on questionnaire, while secondary data were collected by going over the official documents issued by authorized agency. The data were analyzed using stochastic frontier production-function analysis and Cobb-Douglass analysis. The result showed that (1) of all affecting factors, fertilizers such as NPK as well as the land area had positive and significant correlation to the rice production; (2) the average value of technical efficiency of rice farmers was 84% and there were 16% chance to increase the rice production with additional optimal production input.

Technical Efficiency and Profitability of Cassava Production in Delta State: A Stochastic Frontier Production Function Analysis

The study empirically examines the production efficiency of cassava farmers in Delta State, Nigeria, using stochastic frontier analysis. A multi-stage sampling procedure was used to select 120 farmers. The result showed that 68.3% of cassava farmers fell within the age range of 40-59 years, majority (63.3%) of them were females, 69.2% had formal education, 51.7% had 6-10 years farming experience, 62.5% had household size of 6-10 persons, 70% did not belong to cooperative society, 88.3% of them had farm size between 0.1-0.9 ha, 76.7% did not have access to credit and 74.2% also did not have extension contact. A mean technical efficiency of 67% was recorded. The results imply that the average efficiency of cassava production could be improved by 33% through better use of existing resources and technology. The result showed that the return to scale was 1.306.The gamma coefficient was 0.86, implying that 86% of variation of cassava output from the production frontier was accounted by the technical inefficiency of the farmers. The major factors which influenced the farmers technical efficiency were farm size, planting material and capital while farming experience, level of education, access to credit, gender, age of farmer and household size exerted a significant effect on their inefficiency level. The major problems faced by the farmers were inadequate finance, inaccessibility to credit, inadequate access to improved varieties and high cost of inputs. The study deduced that the gross margin and net farm incomes were N155,726.34 a and N147,464.84 with BCR of N2.38, suggesting that cassava production is profitable. It is recommended that more farmers should venture into cassava production as a means of wealth creation and employment generation.

EFISIENSI TEKNIS USAHATANI PADI SAWAH ORGANIK DI KABUPATEN BANYUMAS

The research objectives are to 1) determine the role of organic fertilizers, vegetable pesticides, seeds and labour on the productivity of organic rice farming; 2) factors that cause inefficiencies in the use of production inputs in organic rice farming in Banyumas Regency. The research method used was survey method, the method of determining respondents in a purposive manner (38 farmers). The analytical method uses the stochastic frontier production function analysis method. The results showed that technically the increased use of seeds, manure, liquid organic fertilizer (POC), liquid organic KCl fertilizer and nutrition could increase the productivity of organic lowland rice in Banyumas Regency. Labor has a significant and negative effect on the productivity of organic rice farming. While pesticides have no significant effect on increasing the productivity of organic lowland rice. Management factors that influence the technical inefficiency of organic rice farming according to the signs of hope are formal education and dummy membership in farmer groups. While age and experience did not significantly affect technical inefficiency. The coefficient value of the educational variable is -0,3329 and has a significant effect on the technical inefficiency of organic rice farming. The negative sign of the formal education variable indicates that the higher the farmer's formal education level, the lower the technical inefficiency or the higher the farm's technical efficiency.

Technical and Environmental Efficiency of MSW Incineration Industry in Korea-A Stochastic Frontier Production Function Analysis

This article analyzes the technical and environmental efficiencies of the MSW incineration industry across 16 cities and provinces in South Korea. The empirical results show significant variations in environmental efficiency, which range from 0.275 to 0.989 with a mean value of 0.912. The Gyeonggi-do region is the most environmentally efficient, while Busan is the least efficient. Moreover, some cities, such as Busan and Daegu, exhibit high technical efficiencies yet have dramatically low environmental efficiencies. Similarly, Seoul and Gwangju perform excellently in terms of environmental efficiency but have the lowest technical efficiencies. The output elasticity was calculated for each input, and the average output elasticity for CO2 is 0.090. Finally, the scale elasticity in the waste incineration industry was lower than 1.

Technical Efficiency of Improved and Traditional Wheat Varieties in Paktia, Afghanistan: A Comparative Stochastic Frontier Production Function Analysis

Technical Efficiency of Improved and Traditional Wheat Varieties in Paktia, Afghanistan: A Comparative Stochastic Frontier Production Function Analysis

Profitability and technical efficiency of leafy vegetable production: a stochastic frontier production function analysis

ABSTRACT Smallholder leafy vegetable farmers are often faced with resource-use inefficiency in production. This work examined the profitability and technical efficiency of leafy vegetable production to determine sources of inefficiencies in smallholder production. The Maximum Likelihood Estimates of the Stochastic frontier production function indicated factors positively influencing production gross margin were education level, experience, seed, labor costs, fertilizer and farm-size; farmer age negatively influenced results, especially those who have less contact with extension agents. The mean efficiency score was 0.804 with R2 of 0.912. With more education, the application of required inputs could improve the yield of leafy vegetables.

Measuring Energy Efficiency in Kerala: Data Envelopment Analysis

Traditionally, there are two basically reciprocal energy efficiency Indicators: one, in terms of energy intensity, that is, energy use per unit of activity output, and the other, in terms of energy productivity, that is, activity output per unit of energy use. The enquiry that has proceeded from the problems associated with this method of a single energy input factor in terms of productivity has led to multi-factor productivity analysis. We have here two approaches: parametric and non-parametric. Parametric approach famously includes two methods: the erstwhile popular total factor energy productivity analysis and the currently fanciful stochastic frontier production function analysis; The non-parametric approach is popularly represented by data envelopment analysis. The present paper is an attempt to measure efficiency in electrical energy consumption in Kerala, India. We apply the non-parametric mathematical programming method of data envelopment analysis of the multi-factor productivity approach, and estimate the efficiency measures under the two scale assumptions of constant returns to scale (CRS) and variable returns to scale (VRS); the latter includes both increasing (IRS) and decreasing returns to scale (DRS). Scale efficiency measures are also given to find out whether a firm is operating at its optimal size or not, implying degrees of capacity utilization.

Estimation of technical efficiency of broiler production in Peninsular Malaysia: A stochastic frontier analysis

This study analyzed the technical efficiency of poultry production in Peninsular Malaysia using the stochastic frontier production function analysis. Time series data were collected for this purpose. The frontier function involved variables such as farm, farmer and economic variables. An econometric technique of the stochastic frontier production function approach was applied whereby technical efficiency was measured together with a systemic inefficiency farm in the inefficiency model. The results showed that during the early period, technical progress was rather slow, but subsequently improved during the second period. This is due to changing structure and labor saving technologies which focus towards modernization of the broiler industry. However several policy reforms are needed to enhance the global competitiveness of Malaysian broiler industries especially pertaining to technology policy. It can be concluded that improved extension linkage to sensitize the producers of the need to use new technology such as close house systems. In addition, the government must boost efforts to produce and develop genetically improved breeds of poultry of a higher feed conversion ratio.

Profitability of Investment and Farm Level Efficiency Among Groups of Vitamin A Cassava Farmers in Oyo State Nigeria

Biofortified (vitamin A) cassava was developed through convectional breeding similar to most other improved varieties cultivated by Nigeria farmers. Despite its potential in addressing the increasing food demand and malnutrition in the country, lack of empirical knowledge about its yield and return on investment has been a major barrier to the uptake of this technology among farmers in Nigeria. This study examined the socio-economic characteristics of vitamin A cassava farmers; analyzed farm level efficiency and return on investment from vitamin A cassava in the study area; determined the factors affecting farm level efficiency and productivity, and examined the constraint to productivity and profitability among vitamin A cassava farmers. A multistage random sampling was used to select a total of 100 vitamin A cassava farmers in the study area. The data collected were analyzed using descriptive statistics, stochastic frontier production function (SFPF), profitability ratio and regression analysis. The results indicated that investing in vitamin A cassava as a business was very profitable. The result showed that 82% of the respondents were male, the mean age of the farmers was 53.25, 49% had only primary school certificate education, 66% farmed on the land between 1-2 hectares. The result further showed that on the average, total revenue was N261511.90, the total variable cost was N87754, gross margin was N173757.9, total cost was N179828.8, and net income was N81683.05. Mean technical efficiency was 78.73%. The study concluded that vitamin A cassava production in the study area was efficient and profitable. These results have implications for the design of effective advocacy strategies to attract more farmers into vitamin A cassava production in Nigeria.

TECHNICAL EFFICIENCY OF SHALLOTS FARMING ON UPSUS PROGRAM USING STOCHASTIC FRONTIER ANALYSIS (CASE STUDY IN GONDANG SUB-DISTRICT, NGANJUK REGENCY, EAST JAVA, INDONESIA)

These study aims to the analyze factors that affect the production of onion farming, to analyze the level of technical efficiency of onion farming, and to analyze the factors that affect the inefficiency onion farming in UPSUS APBN-P 2017 Program. This research uses Stochastic Frontier production function analysis method with Maximum Likelihood Estimation (MLE) approach which aims to analyze production factors that influence on onion production. The second analytical method is using tobit regression that aims to determine what factors affect the technical inefficiency in onion farming in Gondang Sub-district.The result of this research is known that the significant effect on onion farming production inGondang Sub-district are seed, urea fertilizer, KCl fertilizer, ZA fertilizer, and labor. The average value of efficiency achieved is equal to 0.71. The total of 52 farmers are technically efficient and as many as 38 farmers are technically inefficient. In the result of tobit regression analysis, it is known that the factors that significantly influence the technical inefficiency of onion farming in Gondang sub-district are age, farming experience, training participation, and program officer control.

Efficiency analysis of cotton production: a case study of gassol and lau local government of Taraba State, Nigeria

This Study analyzed the efficiency of cotton Production in Gassol and Lau Local Government Areas of Taraba State. Data were collected with the aid of structured questionnaires administered to 81 randomly selected farmers in the study areas and analyzed using descriptive statistics and stochastic frontier production function analysis. The result revealed that majority of farmers (67.9%) were young, mostly males (86.42%) and educated (86.41%). The result of the budgeting technique showed that the total revenue (TR), gross margin (GM), net Farm income (NFI) and Return on Investment (ROI) per hectare were N55, 108.70, N21, 128.70, N20, 008.70 and N0.62 respectively. The result of the stochastic frontier production analysis revealed that the variance parameter indicates positive and significant relationship at 5% level of probability for agro-chemicals and family labour at 1% level of probability for fertilizer, labour and farm size. Mean technical efficiency index was 0.77 while the minimum and maximum technical efficiency were 0.37 and 0.97 respectively. The study also identified that low price of cotton seed and high cost of inputs are the major challenges faced by cotton producers. The study recommended that inputs should be subsidized by the government and be channeled through the community leaders.

Profit Efficiency among Cotton Farmers: A Cobb-Douglass Stochastic Frontier Production Function Analysis

Based on Stochastic Frontier Profit Function that assumed Cobb-Douglass specification form, a multiple regression model was estimated using a cross-sectional data obtained from a sample of 349 cotton farmers by means of a multi-stage and simple random sampling techniques. Maximum likelihood estimates of the specified profit model explained that profit efficiency of the producers varied between 67.1% and 98.1% with mean 91.3% implying that an estimated 18.7% of the profit is lost due to a combination of technical and allocative inefficiencies in cotton farming production. In addition, results from the technical inefficiency model showed that age, education, farming experience, credit access, extension visit and marital status were significant factors influencing profit inefficiency, revealing that profit inefficiency in cotton production could be shortened significantly with improvement in the level of the aforementioned socio-economics characteristics of the sampled farmers. The overtone of these results is that, it would give more insight to policy makers for further improvements in productivity by given more emphasis to exploiting the technical efficiency ?gap? through adaptive research, farmer education and improved input supply.