Stochastic Frontier Production Research Articles

Interstate Disparity in Combating COVID-19 in India: Efficiency Estimate Across States

Currently, COVID-19 is the most lethal menace in the world. Due to its health and economic consequences, it becomes a serious challenge for the economy. The present article aims to explore India’s interstate disparities of efficiency in combating COVID-19 based on secondary data. Besides, an attempt has been made to pinpoint the factors responsible for the inefficiency of resisting this deadly virus. The interstate efficiency measurement is facilitated by applying stochastic production frontier analysis. The empirical result divulges that among the Indian states, Bihar is the most efficient in combating COVID-19. The empirical estimation of the frontier model discloses that the number of doctors, nurses, police force, isolation beds and hotspots positively and significantly influence the recovery rate from COVID-19 in Indian states. The empirical results of the inefficiency effects model suggest that the share of elderly and urbanisation reversely influence the efficiency in combating the virus, while favourable sex ratio, literacy rate, regular salaried employment, digitalisation and ruralisation stimulate the efficiency of the concerned state. The study concludes that efficient utilisation, coupled with the advancement of the existing health infrastructure, is imperative for the acceleration of the recovery rate from this pandemic.

Efficiency and productivity growth in US food manufacturing industries: Exporters, ownership changes, and firm characteristics

AbstractThis study employs a stochastic production frontier framework to measure productivity growth among exporters, non‐exporters, and firms experiencing ownership changes through mergers and acquisitions in US food manufacturing. Analyzing a panel data set that integrates Economic Censuses and transaction‐level exports, the results reveal the coexistence of more productive exporters, driven by technical efficiency, alongside less productive non‐exporters. Exporters in arm's length transactions show productivity growth driven by technical efficiency change, while those in related party transactions benefit mainly from technological change. Firms undergoing ownership changes exhibit positive productivity growth with a greater contribution from technical efficiency compared to those without such changes.

A Stochastic Production Frontier Analysis of Factors That Affect Productivity and Efficiency of Logging Businesses in Virginia

Abstract Understanding the effect of the relationship between timber harvesting attributes on loggers’ productivity and efficiency is crucial for the feasibility and expansion of sustainable forest management and logging. We applied a stochastic production frontier model to firm-level operational data collected from 202 loggers in Virginia, United States, in 2019. Logging equipment value, physiographic region, tract area, number of workers and crews in the woods, college education level, and harvest type statistically increase harvesting productivity. Harvesting productivity in the Coastal Plain was the greatest of all physiographic regions, and pine clearcut productivity was statistically greater than that of hardwood thinning. On the other hand, manual felling reduces harvesting productivity. We found an average efficiency rate of 67% among firms in our sample, which is similar to that found in the literature. The estimated values can show factors that improve forest harvest productivity through better planning and investments while improving the sustainable use of inputs and resources. Study Implications: We empirically analyzed factors affecting logging productivity and efficiency in the southern US state of Virginia. Increased productivity was associated with working in the Coastal Plain physiographic region, investing in logging equipment, increasing the number of workers and crews in the woods, increasing pine clearcut as opposed to hardwood thinning, choosing optimal harvesting tract size, and having a college education as opposed to no high school degree. Manual felling reduces harvesting productivity, and average BMP implementation time does not affect harvesting productivity. Our results can be used as a guide in planning future decisions to increase logging productivity.

A Stochastic Frontier Approach to Study the Relationship between the Hygienic Quality of Bulk Tank Sheep Milk and Technical Efficiency of the Coagulation Process.

Sheep milk from local breeds is important for the production of high-quality cheeses throughout the Mediterranean region, such as Manchego cheese in Spain. To maintain sustainable and efficient production, it is necessary to reach a better understanding of how the composition and hygiene of the milk affect the coagulation process, with the aim of optimizing production yield. This study implemented a stochastic production frontier function to estimate the potential production of curd and efficiency using data from the four seasons of a study of 77 Manchega sheep farms. The Cobb-Douglas production frontier model was estimated using the maximum likelihood estimation method. The results showed that the content of protein, lactose, and fat exhibited increasing returns to scale, with protein content being the most significant factor for curd production. Approximately half of the inefficiency was due to factors related to the technological properties and the hygiene of the milk. The pH, curd firmness, and concentration of lactic acid bacteria improved the efficiency of coagulation, while the concentration of spores of lactate-fermenting Clostridium spp., Pseudomonas spp., staphylococci, and catalase-negative gram-positive cocci favored the inefficiency of the coagulation process. To date, this is the first study to evaluate the effect of different factors, such as microbial groups, milk composition, and technological properties, on the efficiency of the coagulation process in dairy sheep.

Economic analysis of inefficiency in wheat production: An empirical study from India

The study undertook an effort to trace the production inefficiency between different farm sizes (i.e., marginal, small, semi-medium, and medium farms) for wheat crops in Uttar Pradesh, India. Using a sample of 320 farmers from the U.P., the study employed the stochastic production frontier (SPF) approach to determine the level of inefficiency using key inputs such as land, irrigation, fertilizer, seed, pesticides, equipment, and labour. Further, factors such as age, farm size (FS), soil fertility problem (SFP), awareness spearheaded by the panchayat (ASP), inaccessibility to certify seeds (ICS), and Simmons land fragmentation index (LFI) that accounted for inefficiency among various farm sizes have been taken into account. The study found that the inefficiency factors used in the study are hindering wheat production. The study exhibits significant differences among farm-wise inefficiency in Uttar Pradesh and therefore suggests the possibility of increasing the production of wheat crops in the state. The study recognizes that for farms with above-two-hectare land, production is relatively higher as compared to small and marginal farms’ production. Thus, farms above 2 hectares are, in real terms, recognised as true economic holdings in the study, as they are less inefficient relative to others. The study suggests policy measures to improve the symmetrical information regarding input usages and interventions to reduce marginalisation in the state.

New evidence of the driving forces behind Brazil's agricultural TFP growth—A stochastic frontier analysis with climatic variables and land suitability index

AbstractUsing panel data from 510 Brazilian micro‐regions in three census years (1995, 2006 and 2017), this study presents a productivity decomposition for the Brazilian agricultural sector using stochastic production frontier methods that account for the effects of rainfall, temperature and the land suitability index. We also calculated the total factor productivity (TFP) index and decomposed it into technical efficiency, technological change, scale efficiency and environmental efficiency. This article thus provides a new and more realistic assessment of recent Brazilian agricultural productivity growth. In recent decades, Brazilian agriculture has become widely known for presenting fast productivity growth; however, our results suggest that a lower TFP growth rate than previous estimates (1.96% per annum) and the overall effects of climate change could potentially compromise Brazilian agricultural TFP growth in the long run. Our findings might thus generate insights for agricultural and regional policies to increase efficiency in the sector and promote sustainable agricultural development in Brazil, which will contribute to the sector's competitiveness in international markets, the country's social and economic welfare, and environmental conservancy.

A flexible stochastic production frontier model with panel data

SummaryWe propose a flexible stochastic production frontier model with fixed effects for the panel data in which the semiparametric frontier is additive with bivariate interactions. To avoid potential misspecification and/or “wrong skew problem” due to distributional assumptions, we model the conditional mean of the inefficiency to depend on environmental variables and to be known up to a vector of parameters. We propose a difference‐based estimator for parameters characterizing the conditional mean of the inefficiency term, a profile series estimator, and a kernel‐based one‐step backfitting estimator for the frontier to facilitate inference. We establish their asymptotic properties and show that each component in the frontier estimated by the kernel‐based backfitting has the same asymptotic distribution as the one estimated with the true knowledge on the other components in the frontier (i.e., the oracle property). Through a Monte Carlo study, we demonstrate that the proposed estimators perform well in finite samples. Utilizing a panel of Chinese firm‐level data in 2000–2006, we apply our method to estimate the frontier and efficiency scores and conclude that export plays a significant role in reducing the efficiency of firms.

Eficiencia técnica en la ganadería de carne bovina en Uruguay

Livestock farming is the agricultural activity with the greatest individual land-use, but it faces competition from other sectors for land, and is criticized for its environmental footprint. In this global context, Uruguay emerges as an important case study, boasting a long tradition and significance in the beef export sector. Enhancing livestock productivity is imperative to mitigate environmental impacts, and bolster farm competitiveness and food production. This study delves into the technical efficiency of cattle ranches focused on cow-calf production in Uruguay during the 2011 agricultural year, with nationwide and mandatory data coverage. Using data from the 2011 General Agriculture Census we estimate a translog stochastic production frontier model encompassing key inputs (livestock units, grazing area, and labor), along with control variables such as soil suitability and infrastructure improvements. Our findings underscore the potential to augment Uruguay's beef production by an average of 26.4%, harnessing existing resources and technology while improving ranch management. Moreover, variables like the extent of reliance on livestock farming as the primary source of income of the ranch, the use of outsourced services, foreign cattle ownership ratios, and agronomic and veterinary consultation exert noteworthy significant impacts on TE.

Impact of Microdosing Practices on Technical Efficiency: An Analysis Accounting for Selection Bias Among Smallholder Maize Farmers in Burkina Faso

Smallholder maize farmers are currently confronted with the arduous challenge of managing limited financial resources while incessantly facing the issue of land degradation. To address this issue, an alternative solution has been implemented to optimize the use of chemical fertilizer by adopting microdosing. This innovative system not only helps them enhance their agricultural productivity but also allows them to protect the environment. However, it is unclear how microdosing adoption could increase the technical efficiency (TE) of maize production. Therefore, this research aims to assess how the adoption of microdosing affects the technical efficiency of maize production as well as identify the key factors that influence the technical efficiency of maize production in Burkina Faso. To achieve this goal, farm household survey data was conducted with 210 randomly selected farmers from the Plateau Central and northern regions of Burkina Faso. To account for potential selection biases that could result from both observable and unobservable factors, we used a sample selection stochastic production frontier model and a propensity score matching approach. A stochastic meta-frontier approach was applied to estimate TE differences and the technology gap between adopters and non-adopters. The findings showed that adopters of microdosing have an average efficiency of 68 percent, which is higher than the 53 percent estimated for non-adopters. Adopters of microdosing have been found to have high TE and better agricultural technology than non-adopters. The meta-frontier estimation revealed that the adoption of improved maize varieties would yield better returns. This study contributes significantly to the literature on how fertilizer microdosing affects maize productivity, as well as the policy implications of targeting and encouraging smallholder maize farmers in Burkina Faso to optimize the use of productive inputs and improve maize output by using microdosing.

Technical Efficiency of Handloom-based Micro-enterprises in Assam, India: A Stochastic Frontier Analysis

Improving technical efficiency is one of the most effective ways to boost output in any manufacturing process. The efficiency level of enterprises can be improved by identifying their sources of inefficiency. The present article examines the technical efficiency and tries to identify the factors causing technical inefficiency in handloom-based micro-enterprises in Assam. The article used primary data and collected from 312 micro-level handloom enterprises spread across four districts of Assam. The stochastic frontier production with an inefficiency effects model is used for the purpose of analysis. Labour, capital and material inputs are found to be significant and labour is the most effective factor for increasing of output level. The mean technical efficiency of overall enterprises is 0.67 and a wide variation in the level of technical efficiency among the sample handloom enterprises is observed. Inefficiency model shows that a high yarn capital ratio, lower product diversity, entrepreneurs with training, a higher number of employees and adoption of promotional practices tend to reduce the technical inefficiency of the handloom enterprise significantly.

EFFICIENCY OF CAULIFLOWER CULTIVATION IN A SELECTED AREA OF BANGLADESH

Cauliflower, a pivotal winter crop, is cultivated widely in Bangladesh. This study was conducted to assess the socioeconomic characteristics and to explore the farmers’ efficiency of cauliflower production in Gazipur district of Bangladesh by applying the stochastic production frontier approach. Primary data were collected through a field survey of 60 cauliflower farmers from January to March 2023, using a semi-structured interview schedule. The major findings of this study revealed that 95% of the respondents were aged between 30 and 64 years; 48.33% of households had a small family size; and 86.67% of the respondents’ primary occupation was agriculture. Cauliflower production was profitable. Per hectare total cost, total return, gross margin, net return, and benefit-cost ratio (BCR) were Tk. 286112, 386250, 138218, 100138, and 1.35, respectively. The mean farmer's technical efficiency was 90%, which implies that the household cultivating the cauliflower can increase revenue by 10% at a given level of resources. Cauliflower farmers complained of a lack of quality seed, the high price of quality seed, natural calamities, and attacks of pests and diseases. Cauliflower is one of the important vegetable crops grown by farmers, mainly to generate household income. The study area has tremendous potential for cauliflower production.

Strategic resilience: Integrating scheduling, supply chain management, and advanced operations techniques in production risk analysis and technical efficiency of rice farming in flood-prone areas

Farmers face various risks such as production risks in the use of technology, pests, climate change and natural disasters. Farmers in disaster-prone areas have different responses depending on their behavior towards the risks posed. The main problem in this research is how farmers behave towards production risks due to flooding and the technical efficiency of rice farming in flood-prone areas. The aim of this research is to analyze farmers' behavior towards production risks due to flooding and the technical efficiency of rice farmers in flood-prone areas. The results of this research will provide important information for policy simulations that the government can implement towards farmers affected by natural disasters and for sustainable disaster mitigation strategies. The novelty of this research is that it combines two theories, namely risk behavior and agricultural technical efficiency in producing disaster mitigation strategies. The research location was determined purposefully in Pasuruan and Bojonegoro Regencies. The data in this research are primary and secondary data with the sample in this research being farmers. The sampling technique in this research is a multi-stage cluster sampling technique. The analysis method in this research uses Just Pope. and the Cobb-Douglas production function model with the Stochastic Production Frontier approach. The target of these research findings is a model of the types of behavior regarding the risks of farmers who are flood victims, as well as the level of technical efficiency of rice farming and the factors that influence it. The expected findings are policy recommendations regarding disaster mitigation from economic and agricultural risk aspects to create sustainable agriculture.

Economic efficiency of smallholder okra (Abelmoschus species) production in Kaduna State, Nigeria: Implication for poverty alleviation

This study evaluated economic efficiency of smallholder okra (Abelmoschus species) production in Kaduna State, Nigeria: Implication for poverty alleviation. A multi-stage sampling technique was used to select 120 smallholder okra farmers. Primary sources of data were used. Data were analyzed using farm budgetary technique, financial analysis, stochastic production frontier model, allocative efficiency model, economic efficiency model, Tobit dichotomous regression model, and principal component model. The results show that the mean age of smallholder okra farmers was 43 years. Averagely, okra farmers had 1.8 hectares of farm land. The gross margin and net farm income of okra production per hectare was estimated at 619,325.77 Naira and 559, 194.76 Naira respectively. This signifies that the smallholder okra production was profitable. The mean technical, economic, and allocative efficiency scores were 0.7918, 0.5338, and 0.8345 respectively. The socio-economic factors influencing economic efficiency of smallholder okra production include: age (P<0.01), educational level (P< 0.10), marital status (P< 0.01), household size (P <0.01), farm size (P<0.01), and member of cooperative organization (P<0.05). The major constraints encountered by okra producers were lack of farm inputs, lack of credit facilities, and high cost of labour. The study recommended that farmers should be provided with improved variety of seeds, chemicals, credit facilities, and fertilizer inputs in order to increase their productivity and efficiency.

Production Efficiency of Market Stakeholders of Paddy Crop: A Comparative Study of Punjab and Uttar Pradesh

The present study analyzed the efficiency of the beneficiaries of the agricultural market, viz., FCI and Mandi Samities, concerning two states (Punjab and Uttar Pradesh) by employing a stochastic frontier model on cross-sectional data. Two hundred eighty samples were collected to analyze the production efficiency of crucial inputs such as land, irrigation, fertilizer, manure, seed, pesticide, equipment and labour. The study revealed that production efficiency was relatively higher among Punjab farmers than in Uttar Pradesh. The study recognized the role of socio-economic factors, specifically land inputs, education, fertilizer, pesticide, and human labour, which accounted for high efficiency in the regulated market of the Punjab state. The study recommended adequate public policies to prevent the ongoing diminution of land holdings irrespective of state. Further, Punjab had more institutionally commercialized agriculture, and Uttar Pradesh lags in it. Uttar Pradesh needs to boost the aforementioned socio-economic factors through policy interventions to increase the efficiency of the participating farmers in the market. Keywords: Agriculture, production efficiency, stochastic production frontier. JEL Codes: C00, C14, Q10, Q13.

Patterns of Innovation and Firms’ Efficiency in Case of Indian Manufacturing Sector

This study examines the linkage between patterns of innovation and firms’ efficiency of Indian manufacturing sector. The results based on primary survey show that firms which have either introduced new products or improved their products through process innovation are relatively efficient. Further, by employing a stochastic production frontier analysis, the study finds that firms those are engaged in various patterns of innovation are more technically efficient. We also find that firms’ age, capital intensity, skilled workforce and capital-output ratio are key factors that affect the technical efficiency of these innovative firms.

Capital diversion in Vietnamese state-owned enterprises

PurposeThe authors estimated the hidden overhead (capital diversion or wasteful use of capital) of Vietnam state-owned enterprises (SOEs).Design/methodology/approachThe authors used a panel data set of 10,200 Vietnam SOEs observed over the period 2010–2018. The authors modeled and estimated the hidden overhead by using a stochastic production frontier. The hidden overhead parameter is modelled as the technical inefficiency in the production function.FindingsVietnam SOEs are very capital intensive. The hidden overhead (or the wasteful use of capital) is very high with an average rate of 69%.Research limitations/implicationsAlternative estimation methods should be used to account for endogeneity in production inputs. Lack of comparison with the Vietnam private firms.Originality/valueThe paper proposes an original way to quantify hidden overhead (or capital diversion) in the Vietnam SOEs. The finding (a capital diversion rate of 69% on average) is astonishing. It calls for an urgent and profound reform of the Vietnam SOEs.

Technical efficiency and its determinants in regulating adolescents’ coronavirus infection across Asian countries

The coronavirus pandemic, besides generating health distress, influences the socio-economic conditions of humankind. Every adolescent's lifestyle is affected by the virus. Healthy adolescents are not only key contributors to the forthcoming workforce but also a source of a country’s human capital. The purpose of the article is to examine the efficacy of various Asian countries in regulating the spread of the coronavirus among adolescents. In addition to that, the paper also attempts to pinpoint the prime causes of the inefficiency of a country in regulating the same. The paper also examines the behavioural changes among adolescents across Asian countries in pre-and-post pandemic times. In this context, the study identifies the impact of adolescents’ tobacco consumption, female political leadership, and accreditation on a country’s efficacy to regulate adolescents’ coronavirus infection. The study’s empirical analysis covers twenty-one Asian countries. By using the Panel Stochastic Production Frontier, the study concludes that Kazakhstan is the most efficient country and Afghanistan is the least efficient country on the list. The inefficiency effects estimates conclude that adolescents’ tobacco consumption decreases and good governance practices increase the efficiency of a country in regulating the spread of adolescent coronavirus infection. Additionally, the paper finds no significant behavioural changes among adolescents in pre-and-post pandemic times across Asian countries. The paper concludes with appropriate policy recommendations supported by empirical evidence. The paper also identifies its shortcomings and suggests potential future lines of inquiry.

Internet use and technical efficiency of grain production in China: a bias-corrected stochastic frontier model

Internet technology has unique advantages, such as rich information, rapid dissemination, and overcoming spatial limitations. It is considered an effective approach to promote agricultural technology application and enhance agricultural technical efficiency. However, it is still unclear how Internet use affects the technical efficiency of smallholders in grain production. Based on the grain production data of 1699 smallholders in China, this study uses the bias-corrected stochastic production frontier and propensity score matching to obtain an unbiased estimate of the impact of Internet use on technical efficiency and examines its channels of action. The empirical results indicate that the decision of households to use the Internet is influenced by the individual characteristics of the household head, household characteristics, and village characteristics. The age of the household head has a significant negative impact on Internet use, while the education level and health status of the household head, household income and size, and the topography of the village have significant positive effects on Internet use. We also find that Internet use has a statistically significant positive effect on technical efficiency, and the selection bias leads us to underestimate this effect. Furthermore, we verified the channels of Internet use affect technical efficiency by alleviating financial constraints, broadening social capital, and improving the level of mechanization. Therefore, policymakers must strengthen the construction of Internet infrastructure in rural areas and improve the Internet penetration rate in rural areas. Furthermore, policymakers can establish technical training centers to help farmers learn Internet technology and new agricultural production techniques. Lastly, policymakers can collaborate with banks, research institutions, cooperatives, agricultural enterprises, and other entities to develop diverse policy measures that provide farmers with financial support, technology assistance, and production services.

Does practicing healthy lifestyles improve the technical efficiency of farms?

PurposeThe purpose of this paper is to ascertain if practising healthy lifestyles improves the technical efficiency of farms in Kwara state, Nigeria. In theory, all deviations from the optimum level of output are due to random effects and inefficiency of producers in which their health plays a key part and is dependent on the kind of lifestyle practiced whether healthy or unhealthy.Design/methodology/approachCross-sectional data were employed through a three-staged sampling technique to pick 320 arable crop farmers across the state using a well-defined questionnaire. Data analysis was carried out using descriptive statistics, healthy lifestyles index (HLI), stochastic production frontier (SPF) and propensity score matching (PSM).FindingsFirst, the analysis showed that about one-third of the sampled arable crop farmers practised healthy lifestyles. Second, the average technical efficiency of arable crop production for farmers who practised a healthy lifestyle was 0.893, and the level of technical inefficiency of the farms was determined by health-related lifestyle status, number of day's illness and educational level. Third, technical efficiency was improved by 0.00431067 for farms whose farmers practised a healthy lifestyle.Originality/valueRather than seeing that technical efficiencies of farms are attributed to farm characteristics, inputs used and socioeconomic characteristics alone, the findings suggest that technical inefficiencies of arable crop farmers were also due to the kind of lifestyle practised, which was evidenced in the increased efficiency for farmers who practised healthy lifestyle.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-05-2023-0353

The Impact of Using Certified Seeds on The Technical Efficiency of Garling Farming In Indonesia

The use of certified seeds can increase productivity and technical efficiency of garlic farming. This study aimed to examine the effect of using certified seeds on the technical efficiency and productivity of garlic farming. This study uses secondary data in the form of cross-sections from the Horticultural Plant Household Survey (SHR, 2014) conducted by the Central Bureau of Statistics (BPS). The number of samples used is the same as the number of SHR 2014 samples. These data were analyzed using stochastic production frontier sample correction (SC-SPF) combined with propensity score matching (PSM) to eliminate observed and unobserved biases. The average treatment effect on the treated (ATET) used to directly calculate the effect of using certified seeds on productivity and technical efficiency. The average productivity of farmers using certified seeds was higher than that of farmers who did not use certified seeds. Meanwhile, the average technical efficiency (ET) of farmers who use certified seeds is lower than that of farmers who do not use certified seeds. This shows that the use of certified seeds has no effect on the technical efficiency of garlic farming. There are two alternative policies that can be taken, the first is advising farmers not to use certified seeds or the second alternative is improving the mechanism for distributing garlic seed assistance and developing the garlic seed industry.