Stochastic Frontier Production Function Research Articles

Application Research of Fuzzy Control Comprehensive Model in Agricultural Economic Management

Agriculture is the basic industry of the national economy, and the transformation of agricultural economic growth mode is of great significance to ensure the supply of agricultural products and improve the quality of agricultural products. Therefore, it is the only way to solve this problem to change the way of agricultural economic growth through scientific and technological investment, industrial structure adjustment, and other methods. Based on the fuzzy comprehensive evaluation method, this paper analyzes various factors of agricultural economic development and establishes a multilevel fuzzy comprehensive evaluation model of the development status of agricultural economic system. The stochastic frontier production function model of the fuzzy control comprehensive model is applied to decompose the agricultural labor productivity, and the counterfactual thinking and distribution method are used to analyze the influence of these factors on the evolution of provincial agricultural labor productivity differences. The value inequality decomposition method measures the contribution of each factor to the provincial agricultural labor productivity difference as well as the contribution of exogenous explanatory variables to the provincial agricultural technical efficiency difference. It is concluded that the relative contribution rate of nonagricultural activities to the difference in agricultural technical efficiency is the largest, and the average relative contribution rate reaches 74%. The improvement of agricultural labor productivity cannot rely solely on the increase in the input of agricultural material factors, but should rely on science and technology.

Energy Use Pattern and Its Efficiency in Paddy Cultivation in Tamil Nadu, India

The purpose of this study was to identify the socio-economic characteristics of paddy cultivating farmers of various size groups selected from the sample; to examine the resource use pattern of paddy cultivating farmers of various farm size groups; and to evaluate the farm level technical efficiencies in the production of paddy in Thadappalli ayacut of Erode District in Tamil Nadu. The study was conducted in Thadappalli ayacut of Erode District in Tamil Nadu. The research was conducted solely on a representative sample of 150 paddy farmer households drawn from five different villages located within the Thadappalli ayacut in the Erode District. A straightforward proportion, the Cobb-Douglas type stochastic production frontier function model, was utilised in order to arrive at the conclusions. The findings of the study have policy implications because they not only provide empirical efficiency indicators that can be used to plan farm production but also help us identify the potential for crop production improvement across a variety of farming systems based on efficiency. In other words, the findings not only provide policymakers with a tool that can be used to plan farm production, but they also provide policymakers with a tool The findings of the study also provide insight into long-term techniques to improve production that do not require the addition of additional resources. Because education has a big impact on how well people can use technology, it is important to help farmers in the region get both formal and informal education. Keywords: Cost & Returns, Technical Efficiency, OLS, Stochastic Frontier Function

Technical Efficiency in Potato Cultivation in Brahmaputra Valley of Assam, India

Potato is abundantly grown in Assam and is an important source of income and employment in rural areas of the state. But the productivity of potato in the state is low as compared to other states. Among the various factors, productivity of a crop is significantly influenced by technical efficiency. This paper examines productivity and technical efficiency in potato cultivation in Brahmaputra Valley of Assam, India. The study is based on both secondary and primary data. Primary data were collected from a sample of 400 potato growers. The study applied stochastic frontier production function to estimate technical efficiency and employed logistic transformation model of regression analysis to examine the determinants of technical efficiency. The results showed that potato productivity was positively and significantly affected by seed, fertilizer and manure costs. The mean level of technical efficiency among the farmers was 78%. Technical efficiency was found to be the highest in semi-medium and large land holdings. Technical efficiency was positively affected by land size and negatively affected by capital-labour ratio. The study implies that there is a need to promote use of quality seeds and plant nutrients to improve productivity and encourage extensive farming and use of labour to enhance technical efficiency in potato cultivation. SAARC J. Agric., 20(1): 197-208 (2022)

Measuring the Factors Affecting Annual Turnover of the Firms: A Case Study of Selected Manufacturing Industries in India

The manufacturing sector works as an engine of growth as it creates the conducive path for socio-economic development. In the said perspective, numerous studied have empirically proved the positive contribution of manufacturing sector in social – economic development. However, limited studies could examine the factors affecting manufacturing sector in different industries in India. Thus, this study assessed the determinants of the annual turnover of the firms in the Indian manufacturing sector. For aforementioned investigation, it used financial statistics of 154 selected Indian manufacturing firms which were operating in seven different industries (i.e., automobile and auto component, chemicals and petrochemicals, construction, electronics, industrial equipment & machinery, pharmaceuticals, and textiles and apparels) from nine states of India. Log-linear regression model under the stochastic frontier production function technique was considered to examine the impact of specific factors on the annual turnover of the firms. It highlighted that annual turnover of the firms was significantly reflected with labour intensity; firm's age and size, R&D expenditure, and technology up-gradation; investment on machinery; annual salary of workers, skilled and un-skilled manpower. The findings of this study also indicate that India is required to adopt strict intellectual property rights (IPRs) policy to reduce the imitation rate of technologies for further improvement in technology transfer and commercialization. Effective education system, science & technology (S&T) and conducive research & development (R&D) ecosystem would be supportive to increase the performance of firms in the Indian manufacturing sector. It also provides the research direction to validate the empirical findings of this study.

Technical efficiency of health production in Africa: A stochastic frontier analysis

Background: Inefficiency is widespread in health systems all over the world. The World Health Organization (WHO) estimates that 20%-40% of the global health spending is wasted. In African countries, inefficiency of this magnitude will seriously hamper progress towards achieving universal health coverage and other health system goals. It is thus, significant to assess the efficiency of health systems over time in order to set the ground for identifying the contextual factors leading to inefficiency and design appropriate efficiency-enhancing measures.Methods: Using panel data for the years 2000, 2005, 2010, and 2015, the study employs a time-variant stochastic frontier production function to assess efficiency. The input measure used is current expenditure per capita in purchasing power parity (Int$) terms and the measure of output is health-adjusted life expectancy (HALE). Moreover, mean years of schooling, GDP per capita in Int$, and out-of-pocket payment as a share of current expenditure on health were used as technical inefficiency effect variables. Data were analyzed using Frontier Version 4.1.Results: The mean technical efficiency scores were 79.3% in 2000, 81% in 2005, 85.6% in 2010 and 88.3% in 2015. Over the four periods of time, Cabo Verde registered the highest technical efficiency scores, while Eswatini and Sierra Leone had the lowest. The minimum technical efficiency scores were 58.7% (in 2000), 59.1% (2005), 67.4% (2010) and 71.8% (2015). These indicate that despite improvements, there is a significant degree of technical inefficiency. Most of the countries among those in the bottom 10% efficiency scores are countries in Southern Africa, which in 2015 had a very high prevalence of HIV among adults, compared to the top 10%, which had prevalence rates of less than 0.1%.The mean efficiency score increased progressively over time – a nine percentage point increase between 2000 and 2015. The elasticity of current health expenditure was positive (0.06) and statistically significant. All the technical inefficiency variables had no statistically significant effect.Conclusions: Over the period of time covered in this study, there was some improvement in the average technical efficiency scores. However, there was also marked inefficiency in many countries, which is likely to hamper their progress towards universal health coverage and other health system goals. In a context where health spending is too low to provide needed services, it is imperative to address the causes of technical inefficiency and produce more health for the money. Furthermore, low-performing health systems should learn from their relatively high-performing peers.

Farm Specific Technical Efficiency and Potential Output of Banana Crops in South Gujarat

The banana is an important fruit crop grown in Gujarat, especially in South Gujarat. The study aimed to estimate the technical efficiency of banana in South Gujarat by the maximum likelihood estimation (MLE) method using the stochastic frontier production function. The results revealed that the mean level of technical efficiency was 90, 93 and 90 per cent for small, medium and overall farmers, respectively. It indicated that on average, only 10, 6.67 and 8.33 per cent of the small, medium, and overall banana farmers fell short of the maximum possible frontier production technology, respectively. It also indicated the scope of improvement in the yield by managing significant and positive inputs by the respective categories of banana farmers. The potential output for small and medium farmers was 644 and 680.31 q per ha, which was 46 and 47.62 q per ha, more than the actual output. This loss in production was due to the inefficiency of managing input and other factors responsible for technical inefficiency. The factors affecting technical efficiencies suggested that the age of the farmers, household size, education and extension visit had a significant effect on the technical inefficiencies of the farmers.

A Stochastic Frontier Analysis of the Human Capital Effects on the Manufacturing Industries’ Technical Efficiency in the United States

This study seeks to establish substantive empirical evidence on the role of college and non-college labour in productivity through technical efficiency in the manufacturing sector in the U.S. economy. This investigation fits a Cobb-Douglas stochastic frontier function with inefficiency effects to a set of panel data for 15 manufacturing industries over the period from 1998 to 2019. The contribution of this paper lies in the application of the stochastic frontier analysis following the approach of Caudill et al. (1995) by estimating and testing stochastic frontier production functions, assuming the presence of heteroscedasticity in the one-sided error term (inefficiency), which provides robust estimates of the technical efficiency measures. This paper also contributes to the literature in the sense that it follows the Hadri (1999) approach and its extension for panel data, Hadri et al. (2003), assuming the existence of heteroscedasticity in both error terms (the one-sided inefficiency term and the two-sided symmetric random noise). The rationale for the double heteroscedasticity estimation is that it results in more accurate measures of the effects of the technical efficiency determinants. Therefore, it adds another layer of confidence in the economic analysis of the impact of human capital components on the manufacturing sector efficiency and by extension, its productivity. The stochastic frontier results show the effects of highly educated workers and low educated workers – proxied by college and non-college labour – on technical inefficiency. This is where the maximum likelihood estimates suggest that the increase in the percentage of the hours worked by college workers tends to contribute positively to technological efficiency in the U.S. manufacturing industries. While on the minus side, it can be noted that the rise in the share of the hours worked by non-college persons seems to have negative impact on efficiency in these industries. JEL Codes: J24, D24, C23, C24, Q12 Keywords: human capital, technical efficiency, stochastic frontier production, double heteroscedasticity, panel data

Economics of Plantain Production among Farmers in Northeast Nigeria

This study analysed the economics of plantain production in Northeast Nigeria. The specific objectives of the study were to; describe plantain farmers’ socio-economic characteristics in Northeast Nigeria; identify factors affecting plantain production in the study area, and also ascertain farmers’ resource use efficiency in plantain production. The study adopted a multi-stage sampling technique to collect primary data from 250 plantain farmers selected from 13 communities. In the analysis of the data, descriptive statistics and a stochastic frontier model were used. The finding of the study indicated that most (86.8%) of the respondents were male, having an average age of the respondents was 39.15 years, who are mostly educated (92.8%) and cultivate an average of 2.39 ha of land. The stochastic frontier production function maximum likelihood estimates of the parameters indicated that the production of plantain is determined by farm size, the number of suckers planted, the amount of hired labour used, and family labour. Similarly, the plantain production cost is being influenced by the cost of plantain suckers, labour, and the depreciated cost of land. Furthermore, the study revealed that the farmers were technically and allocatively efficient, although, the maximum technical efficiency was not achieved by farmers. Therefore, it was recommended that agricultural extension agents should be encouraged to reach plantain farmers with the required production technologies to promote production efficiency.

The heterogeneous effect of forest tenure security on forestry management efficiency of farmers for different forest management types

PurposeAfter the Collective Forest Tenure Reform (CFTR) in China, the enthusiasm of farmers for forestry management is stimulated. However, the forest tenure security varies among farmers, making the research conclusions of its impact on forestry management efficiency inconsistent. Based on the survey data of 1,627 households from the collective forest regions in 6 provinces of China in 2017, this paper not only discusses the differences of farmers' forestry management efficiency after the reform, but also further explores the heterogeneous impact of forest tenure security on forestry management efficiency in combination with different forest management types.Design/methodology/approachThis study employed the stochastic frontier production function model to measure the forestry management efficiency of farmers. Then, Tobit models were used to discuss the influencing factors of farmers' forestry management efficiency.FindingsThe results demonstrate that the improvement of farmers' forest tenure security can effectively improve forestry management efficiency, but the effect is affected by forest management types. For farmers who manage economic forests and non-timber forests, safe tenure promotes the forestry management efficiency; while for those who manage ecological public welfare forests, tenure security plays an opposite role.Originality/valueTherefore, satisfying farmers' differentiated demands for forest tenure according to forest management types to improve forest tenure security and further refining supporting policies of collective forestry reform is of great significance to improve the efficiency of farmers' forestry management in collective forest regions.

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.

Exploring The Effects of Part-Time Hazelnut Farming on Agricultural Land Use Characteristics and Its Social Cost

The purposes of the study purpose were (i) to explore the effects of part-time farming on land use characteristics, productivity, and efficiency, and (ii) to estimate the social cost of part-time farming in hazelnut production. The research data were gathered from randomly selected 152 hazelnut farmers in Ordu and Giresun provinces, Turkey. When estimating the part-time farming social cost in hazelnut production, sacrificed production cost, yield losses, and price losses were assessed and combined. The stochastic frontier production function model was used to measure farm-level productive efficiency. The research findings showed that excessive chemical usage, shorter harvesting time, ignoring soil and leaf analysis results when applying fertilizers, lack of investments among farmers were the reasons for inappropriate land use for the part-time farms in the research area. Full-time farmers had a higher technical efficiency score than part-time farmers. The social cost of part-time farming was ₺4424 per hectare and ₺1.47 billion in Black Sea Region. The study suggested using a legislative process to transfer hazelnut orchards to full-time farmers. Facilitating the transfer of unproductive part-time hazelnut orchards to full-time operations may decrease the adverse effects of part-time farming on the sustainability of land use and of externalities. The study also recommended that prescribing part-time farmers to reach direct government support or benefit farmers' education programs may also reduce the social cost of part-time farming. Developing education and extension programs for increasing the qualification of both family and hired labor may positively contribute the sustainable land use in the region.

Private extension delivers productivity growth in pasture-based dairy farming in the Eastern Cape, 2012–2018

ABSTRACT This study presents a novel way to measure the contribution of private extension to farm productivity for club data. Club data refers to any convenience sample obtained from a study group, consulting firm, cooperative or producer organisation. The study develops a stochastic frontier production function model with the inefficiency effects of pasture-based dairy farming in the Eastern Cape, South Africa. The analysis for 2012–2018 involves 49 adopter farms, and controls for inter-calf period, nutrient use efficiency and the amount of extension contact. Results are robust to functional form specification and there is no evidence of frontier-shifting technical progress for the Cobb Douglas or translog model, but there is a clear productivity benefit to engaging with the private extension service provider working locally (adoption). Productivity rises at 0.91–1.06% p.a. over time and by 1.54–1.62% p.a. with each extra year of the extension. Large farms close to the private extension provider’s base of operations benefit most from being in the group. This case study is important because it documents productivity growth in the period since 2010 and puts the effect of extension on productivity growth back on the local research agenda.

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.

Land Tenure Systems and Agricultural Productivity in Nigeria: A Case of Rice Production

This study examined land tenure systems and rice productivity in Nigeria. Primary data were used for the study. Data were collected with the aid of a well-structured questionnaire. A four-stage sampling technique was used to select a total sample size of three hundred and forty-nine (349) rice farmers for the study. Data were analysed using descriptive statistics, total factor productivity, and the Stochastic production frontier model. The study revealed that a large portion of the land (over 94%) used for rice production was acquired through inheritance mode of land acquisition and communal type of land tenure system widely practised. The result of total factor productivity indicated that 62.18% of the rice farmers were at a sub-optimal productivity level. The results of the stochastic production frontier function revealed that seed (P< 0.10), and fertilizer application (P<0.01) were the significant factors influencing the technical efficiency of rice production in the study area. Based on the findings, the study recommends that the current land use act and policy should be amended to prevent concurrent grabbing of agricultural land for non-agricultural purposes to enhance the availability and accessibility of land for agriculture.

Estimating Technical Efficiency and its Determinants in the Coconut Plantations: The Case of Kurunegala Plantations Limited, Sri Lanka

This study estimated the Technical Efficiency (TE) of coconut production in Sri Lanka using the stochastic frontier production function procedure. Data on inputs and coconut production recorded by Kurunegala Plantations Limited from 2000 – 2018 were used for the analysis. The stochastic production frontier in Cobb-Douglas form and the inefficiency model were estimated by single-step Maximum Likelihood method using STATA 14 computer software package treating coconut yield as the dependent variable and fertilizer, rainfall, labor, chemicals, tractor hours, mulching harrowing/plowing, agro-ecological zones, education level of the managers and bearing coconut extent as independent variables. Results revealed that TE of coconut production ranged from 81-98%, with an average of 88%, indicating that there is scope for increasing the production by as much as 12% without increasing inputs and simply using a higher technology level. The outcome of the analysis shows that inorganic fertilizer, rainfall, labor, tractor hours, and mulching are kind positive and significant. In contrast, agro-chemicals such as weedicides, fungicides and pesticides and plowing/harrowing did not show a significant contribution to coconut production. In respect of the farm and farmer-specific characteristics, the size of the estate has a positive relationship with technical inefficiency, meaning that smaller estates are more efficient than larger estates. It also shows that the agro-ecological zones and educational level have no significant effect on the efficiency of coconut production. The results highlight the need for government and private sector assistance in improving the efficiency of smallholders and promoting access to productive inputs.

Technical Efficiency of Turmeric (Curcuma Longa L.) Production in Kaduna State, Nigeria

Purpose: The study analyzed the technical efficiency of turmeric production in Kaduna State, Nigeria. 
 Methodology: Data for the study were collected with the aid of structured questionnaire from 33 turmeric farmers from Jabba, Kachia, Jama’a, and KagarkoLocal Government Areas of Kaduna State. The collected data were analyzed using descriptive statistics and stochastic frontier production function. 
 Findings: Analysis of the results revealed that the mean technical efficiency of turmeric farmers in the study area was 28% with majority (66.7%) having technical efficiency level of ≤0.303. Also, analysis of the stochastic frontier production function revealed that the socio-economic characteristics of turmeric farmers in the State significantly influenced their technical efficiency. 
 Unique contribution to theory, practice, and policy: It was recommended that campaigns aimed encouraging more youths into turmeric production as well as discouraging large household size among turmeric farmers should be promoted in the study area; and policies aimed at increasing the resource use efficiency of turmeric farmers in the State and hence their farm output should include the farmers’ specific efficiency factors in their formulation.

Prediction of Peak Energy Consumption and Carbon Emission in China Based on Variance Decomposition of Stochastic Frontier Production Function

Prediction of Peak Energy Consumption and Carbon Emission in China Based on Variance Decomposition of Stochastic Frontier Production Function

Profitability and efficiency of pig production in Tamil Nadu

The present study was conducted to explore the cost and returns, profitability in pig (Swine) farming and to analyze the various factors affecting pig production and their level of efficiency in pig production. For the study, a sample of 45 swine farms was purposively selected by a simple random sampling procedure in the North-eastern zone of Tamil Nadu. The data were collected by personal interview method with the help of a pre-tested questionnaire pertaining to the year 2013–2014. The results revealed that minimum cost of production and maximum net return per farm per year from the pig rearing was noticed in large farms. Overall benefit-cost ratio was 1.46, which revealed profitable nature of swine farms in the study area. The results of cobb-douglas production function revealed that the variables, feed, and veterinary care were significant and positively influence the pork production. Allocative efficiency analysis showed that the resource feed was over-utilized and veterinary care was under-utilized. Technical efficiency was calculated using stochastic frontier production function and mean technical efficiency was identified as 76.37% and hence 23.63% of their technical abilities were not realized. Multiple regression was used to identify the factors influencing farm specific technical efficiency and profitability. Thus, the efficiency in pig production in the study area could be achieved through efficient extension programs about advanced scientific management practices for optimum utilization of resources.

Efficiency, valuation, and pricing of irrigation water in northeastern Tunisia

This study examines the effects of irrigation water use efficiency improvements and citrus price fluctuations on water values in the tree production systems of northeastern Tunisia. It also aims to compare water values with the real price of water as currently paid by farmers and determine the optimal price. Cross-sectional data of a selected sample of 42 citrus farms located in the main producing region of this commodity was used for the analysis. To do so, we used the stochastic frontier production function approach. Empirical findings show that significant inefficiencies do exist in the studied sample of farms. Overall mean technical efficiency and water use efficiency are 78.4% and 44.3%, respectively. Based on these values, simulation analysis indicates that an improvement in water use efficiency combined with an increase in citrus prices could shift the water marginal value curve upwards, which will result in higher water valuation. Results also show that the current water price paid by farmers is much lower than the water value estimated at the level of “theoretical” citrus irrigation requirements. Application of higher irrigation water fees is definitely feasible for the studied production system, however, they need to be accompanied by increased incentives for water use efficiency in addition to better market integration of farmers.

Technical Efficiency of Turmeric (Curcuma Longa L.) Production in Benue State, Nigeria

Purpose: The study analyzed the technical efficiency of turmeric production in Benue State, Nigeria. Taro Yamane’s formula was used to select 28 respondents.
 Methodology: The research made use of experimental design and a multistage, purposive and proportionate sampling was used for the study. Data for the study were collected with the aid of structured questionnaire from 28 turmeric farmers in Konshisha, Vandeikya, and Gwer-East Local Government Areas of Benue State. The collected data were analyzed using descriptive statistics and stochastic frontier production function.
 Findings: Analysis of the result showed that majority (53.6%) of the turmeric farmers had technical efficiency level between 31% and 60%. Also, analysis of the stochastic frontier production function revealed that age, sex, farm experience, and household size of turmeric farmers in the state significantly influenced their technical efficiency.
 Recommendations: It was recommended that policies aimed at increasing the resource use efficiency of turmeric farmers in the State and hence their farm output can be increased by providing the turmeric farming communities with improved planting ,harvesting, peeling and drying machines for higher efficiency.