Stochastic Metafrontier Approach Research Articles

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.

Effects of varieties and seasons on cost efficiency in rice farming: A stochastic metafrontier approach

Rice production costs vary substantially across rice varieties and cropping seasons; however, the effects of rice varieties and cropping seasons on the cost efficiency of rice farming have not been given much attention by researchers. In this paper, we attempt to examine these effects on the cost efficiency of rice production in Vietnam. We use a stochastic metafrontier approach to compare the cost efficiency of rice production between two rice variety groups (a high-quality rice variety and a conventional rice variety group) and three cropping seasons (Winter-Spring, Summer-Autumn, and Autumn-Winter). The data consist of 918 observations collected from rice farmers in the Mekong River Delta, the main rice-cultivation region of Vietnam. The results show that there is statistical evidence for the effects of rice varieties and cropping seasons on cost efficiency. High-quality rice variety adopters performed less efficiently (0.837) than non-adopters (0.864). Rice farmers exhibited a lower mean cost efficiency in the Winter-Spring season (0.883) than in the Summer-Autumn (0.907) and Autumn-Winter (0.905) seasons. This research suggests that policies should support inefficient rice farmers to reduce their inefficiency in the Winter-Spring season as well as support high-quality rice variety adopters to catch up with the cost-efficiency level of conventional rice variety farmers.

A stochastic meta-frontier approach for analyzing productivity in the English and Welsh water and sewerage companies

Within the water industry, some water companies provide both water and sanitation services whereas other just water services. Assuming a common technology of different types of water companies may lead to biased estimates of performance. To deal with the problem of incomparability of heterogeneous water companies, the metafrontier approach was employed. A stochastic metafrontier approach was employed to estimate and compare the productivity change of the English and Welsh Water and Sewerage companies (WaSCs) and Water only companies (WoCs) during the years 1991–2016. To identify the drivers of productivity growth, the metafrontier Malmquist productivity was decomposed into four components namely: Group-frontier efficiency change, group-frontier technological change, efficiency catch-up and technological catch-up. The results indicate that over the entire period industry productivity slightly increased by 1.5% per year on average with WoCs performing slightly better than WaSCs. Group-frontier efficiency change, group-frontier technological change and technological catch-up contributed positively to metafrontier productivity growth, whereas the temporal changes of efficiency catch-up have been the source of deterioration.

Performance of Nigerian Rice Farms from 2010 to 2019: A Stochastic Metafrontier Approach

Rice has become the most rapidly growing staple food crop in Nigeria. Despite the country favorable rice production ecology, there is still a huge gap between domestic rice production and consumption patterns. This study uses a two-step stochastic metafrontier model to estimate the performance of rice farms from 2010 to 2019, considering the differences between the North and South rice farms. The results indicate heterogeneity in production technology across farms located in different regions, and that both regions have low technical efficiency. However, Nigeria’s South rice farms were ranked better based on managerial issues rather than technological gaps. To attain self-sufficiency in rice production as proposed in its national plan, there is room for improvement of technical efficiency and output production at current production levels in the country’s rice farms.

On the efficiency of subsidized bus services in rural areas: A stochastic metafrontier approach

The operation of subsidized bus services in rural areas is subject to many factors beyond the bus firm's control. Without incorporating these factors, it is impossible to fairly evaluate the efficiency of the bus services. One of the factors that has been ignored is the different technology sets facing bus firms. To account for various technology sets, this study evaluates the technical efficiency of 20 bus firms and 890 route-year observations in Taiwan using stochastic metafrontier models. The evaluation results provide statistical evidence supporting the existence of different technology sets facing bus firms in four regions of Taiwan. Most bus routes were efficient in providing bus services but less so in attracting passengers, which indicates insufficient incentive designs in Taiwan's current subsidy scheme. Moreover, bus routes of the four regions had different production technologies. While drivers were critical to the service provision efficiency of bus routes of the northern and central regions where the wage level was relatively high, fuel was the primary factor determining the service efficiency of the southern and eastern regions where mountainous roads were relatively common. More frequent services or longer bus routes could attract more passengers in all the regions; however, it was not always efficient to do so in each region. Based on the analysis results, the managerial implications for bus firms in different regions and insights for government policies in revising regulatory constraints are provided.

Cereal production practices and technical efficiency among farm households in major “teff” growing mixed farming areas of Ethiopia: A stochastic meta-frontier approach

Cereal production practices and technical efficiency among farm households in major “<i>teff”</i> growing mixed farming areas of Ethiopia: A stochastic meta-frontier approach

Heterogeneous effects of improving technical efficiency on household multidimensional poverty: evidence from rural Ethiopia

Smallholder agriculture in developing countries is characterized by low productivity. Improving the productive efficiency of farm households is considered one of the paths to increase productivity and reduce poverty. This study analyzed the poverty reduction effects of improving the technical efficiency of cereal-producing farm households using plot-level data from rural Ethiopia. The effects were also evaluated whether they were heterogeneous relative to the level of crop diversification. Multidimensional Poverty Index (MPI) and stochastic meta-frontier approach were used to estimate the poverty status and the technical efficiency scores, respectively, and the Herfindahl Index (HI) was used to compute crop diversification. The instrumental Tobit Model was specified to estimate the poverty reduction effect of technical efficiency. Our results revealed that the mean technical efficiency of farm households was estimated to be 58%. The poverty estimate results showed that a higher proportion of farm households were multidimensional poor. The incidence of poverty and the mean deprivation score was found to be 57.9% and 44.1%, respectively. Overall, the value of MPI estimated was 31.2%, implying the farm households experienced 31.2% of the total deprivations across all indicators. The HI was 0.51, indicating a moderate degree of crop diversification among farm households. The model results showed that a 10% increase in technical efficiency significantly drives down the household multidimensional poverty by 15.3% at 1% level, keeping other things being constant. Furthermore, ceteris paribus, a 10% increase in technical efficiency significantly reduces household multidimensional poverty by 7.0% and 7.8% at 1% level among moderately diversified and least diversified farm households, respectively. In conclusion, technical efficiency has a higher effect on multidimensional poverty among moderately diversified and least diversified farm households. Therefore, enhancing the productive capacity of farm households among the lower degree of crop diversification to efficiently use production inputs may assist in poverty reduction.

Does cooperative membership impact the yield and efficiency of smallholder farmers? Evidence from potato farmers in Mongolia

PurposeThe purpose of this paper is to examine the impact of agricultural cooperative membership on potato production and technical efficiency.Design/methodology/approachA combination of propensity score matching technique and sample selection stochastic frontier framework that addresses potential selection bias due to observable and unobservable attributes is used to estimate the effect of participation between cooperative members and non-members. Using a stochastic meta-frontier approach, the technical efficiency of farmers was estimated and compared.FindingsThe empirical results show that the effect of participation in agricultural cooperatives is associated with increased yield and technical efficiency. A comparison of group-specific frontiers indicates that cooperative members perform better than non-members. Cooperative membership decisions is significantly associated with household and farm characteristics (e.g. education, participation in off-farm work, total farmland, distance to market and geographic location).Practical implicationsThe findings of this study demonstrate that cooperative organisations can be an important tool to enhance the productivity and efficiency of smallholder farmers. Successful cooperative models together with training programs designed to enlighten farmers on the importance and tangible benefits of collective action should be used to enlarge participation in cooperative organisations. In addition, governments and development agencies should implement targeted investment and capacity building programs related to irrigation management, gender-sensitive awareness and development of the internal institutional mechanisms in cooperatives for the transfer of knowledge and mutual learning so that all members benefit from cooperatives.Originality/valueDespite the pervasive evidence of the impact of cooperatives on productivity and technical efficiency in the Asian region, this study is probably the first attempt in the crop sector in Mongolia. It provides a rigorous empirical analysis of the impact of agricultural cooperative membership on potato production and technical efficiency through a counterfactual design.

TECHNICAL EFFICIENCY AND TECHNOLOGICAL GAP RATIOS OF TOMATO PRODUCTION IN NORTHERN NIGERIA: A STOCHASTIC META FRONTIER APPROACH:

The study on technical efficiency and technological gap ratios of tomato production in Northern Nigeria used a stochastic meta-frontier approach to compare the technical efficiency (TE) and technological gap ratios (TGRs) of farmers after establishing the existence of heterogeneous technology adoption among farmers. Data were collected from a cross-section of 359 randomly selected farmers. A trans-log production function model proved more appropriate through a likelihood ratio test, therefore, stochastic frontier analysis and meta-frontier analysis approach were used. The study revealed that Plateau farmers are more technically efficient than Kano and Taraba counterparts respectively. Furthermore, the mean TGR associated with Taraba farmers is tangential to the meta-frontier output, this implies that Taraba farmers adopted the most advanced technology in the industry, while Plateau and Kano farmers need to close up 0.5% and 1.2% gap respectively in order to produce at the optimal output. By policy implication, Plateau and Kano farmers need to be educated on the need to adopt the best agricultural technology to increase their production. This calls for intensification of extension effort in Plateau and Kano state.

Analyzing the Impact of Subsidies on Beef Production Efficiency in Selected European Union Countries. A Stochastic Metafrontier Approach

The European Union Common Agricultural Policy reforms since the early 2000s allowed for the implementation of different types of agricultural subsidies, such as direct support in the form of decoupled and coupled payments, or agri‐environmental payments. As a result, there are significant differences in agricultural subsidies granted in each member state of the European Union. However, there is limited cross‐country comparative empirical evidence regarding the effects of the implementation of different levels and types of subsidies on farm efficiency. Using farm level data for beef farms in Ireland, France, Great Britain, and Germany between 2005 and 2012, we implement the stochastic metafrontier proposed by Huang et al. (2014) and attempt to correct for endogeneity applying the method in Shee and Stefanou (2015). Using these approaches, we contribute to the literature by consistently comparing cross‐country farm performance, as well as exploring the disaggregated effects of different types of subsidies on farm level technical efficiency and on the technology gaps. Our estimates show that although beef farms included operate on average close to the global frontier, there is scope to improve farm level managerial performance. However, they do operate close to the global frontier, although not on it. We also find evidence that implementing full decoupling benefited efficiency, whereas implementing partial decoupling might have hindered technical efficiency improvements for beef farms, as well as technology catch up.

Does fintech innovation improve bank efficiency? Evidence from China’s banking industry

This paper examines whether the development of the financial technology (fintech) industry affects cost efficiency and the technology adopted for China’s banking industry over the period 2003–2017. Fintech industry development indices are constructed using fintech enterprise-level data, and these indices measure the development extent of entire fintech industry and four sub-industries including (1) credit, deposit and capital–raising services, ​(2) payment, clearing and settlement services, (3) ​investment management services ​and ​(4) market support services. The relevant efficiency scores for Chinese banks under different ownership structures are measured by applying the stochastic metafrontier approach. The results show that state-owned commercial banks have the lowest cost efficiency and operate under inferior technology. When considering the influence of fintech development, fintech innovations not only improve the cost efficiency of banks, but also enhance the technology used by banks. This double beneficial effect is more significant in the case of market support service innovations.

A Metafrontier Analysis on the Performance of Grain-Producing Regions in Norway

Previous application of the stochastic frontier model and subsequent measurement of the performance of the crop sector can be criticized for the estimated production function relying on the assumption that the underlying technology is the same for different agricultural systems. This paper contributes to estimating regional efficiency and the technological gap in Norwegian grain farms using the stochastic metafrontier approach. For this study, we classified the country into regions with district level of development and, hence, production technologies. The dataset used is farm-level balanced panel data for 19 years (1996–2014) with 1463 observations from 196 family farms specialized in grain production. The study used the true random effect model and stochastic metafrontier analysis to estimate region level technical efficiency (TE) and technology gap ratio (TGR) in the two main grain-producing regions of Norway. The result of the analysis shows that farmers differ in performance and technology use. Consequently, the paper gives some regionally and farming system-based policy insights to increase grain production in the country to achieve self-sufficiency and small-scale farming in all regions.

Technical efficiency and technology gaps of sorghum plots in Uganda: A gendered stochastic metafrontier analysis

Sorghum plot managers in different locations have varying levels of resource endowment that in turn influence technical efficiency (TE). Therefore, plot managers operate at different levels of technology. The present study applied a stochastic metafrontier approach to assess TE and technology gaps of female, male and jointly-managed sorghum plots. A two limit-Tobit model was subsequently applied to assess determinants of TE. Results indicate that male-managed sorghum plots had the highest metafrontier technical efficiencies (MTEs) (61%, 56% and 15%) and technology gap ratios (TGRs) (98%, 92% and 20%) for Lira, Serere and Kumi districts, respectively compared to female and jointly managed plots. However, jointly managed plots had higher TE and TGRs compared to female plot managers but lower than those of the male-managed plots. Age, distance to plot and farmer group membership influenced TE positively while household size, years of farming sorghum and access to credit had negative effects on efficiency.

Investors’ impact on Czech farmland prices: a microstructural analysis

Abstract This paper analyses farmland price formation under investors’ increased demand in the Czech Republic from 2008 to 2014. We adopt a stochastic metafrontier approach to hedonic price modelling and investigate the relative differences in farm and investor pricing. Our results provide evidence of buyer group-specific land valuations, asymmetric price dispersions and their temporal changes. These changes reflect the developments of market microstructures and market-supporting institutions induced by buyer competition. While initially significantly lower due to high market and bargaining power, prices paid by corporate/cooperative farms converged with high-level investor prices over time. Individual and family farms were largely unable to compete at the new price levels.

Technical efficiency of the small-scale tea processors in Kenya: a stochastic metafrontier approach

PurposeImportance of small-scale tea producers in Kenya is not in doubt. They account for 60% of all tea produced in the country, serve about 560,000 tea farmers and employ about 10,000 people directly. However, the subsector faces a myriad of challenges ranging from declining yields and rising costs of production to fluctuating world prices. Thus, it is imperative that the producers entrench efficiency as a critical success factor. This makes it important for the producers to understand their relative performances to inform decisions on improving input use. Congruent with this motivation, this study sought to analyze the technical efficiency (TE) of the country's small-scale tea processors within and across the regions under the management of Kenya Tea Development Authority.Design/methodology/approachTo allow comparison across regions, this study adopted a stochastic metafrontier approach and to be able to decompose inefficiency into persistent and time-varying components, the study adopted regression analysis.FindingsResults showed that the small-scale tea processors operated at a mean TE level of 76% with a technology gap ratio (TGR) of 97%. This implies that the prevailing level of output could be maintained even if inputs were reduced by 24%. Persistent inefficiency could be reduced possibly through rationalization of structural and managerial components of the firms.Research limitations/implicationsWhile it is important to adopt yield-enhancing technologies and innovation, small-scale tea processors have the latitude to improve their earnings through enhanced TE. They can save up to 24% of their input and be able to pay farmers better even with the fluctuating global tea prices. Enhancing TE should be given priority because it is within the control of the individual firms.Originality/valueThis is a pioneering study in panel data analysis of TE of small-scale tea processors within and across regions in Kenya.

Technical Efficiency and Technological Gaps in Agricultural Production in Selected African Countries: A Stochastic Metafrontier Approach

Technical Efficiency and Technological Gaps in Agricultural Production in Selected African Countries: A Stochastic Metafrontier Approach

Cost Efficiency of English and Welsh Water Companies: a Meta-Stochastic Frontier Analysis

In regulated industries it is important to identify appropriate performance benchmarks to incentivize companies’ performance. This study applies a stochastic metafrontier approach to estimate the cost efficiency of the English and Welsh Water and Sewerage companies (WaSCs) and Water only companies (WoCs) over the period 1998–2009. The results indicate that the UK water industry is a mature and efficient sector in which WaSCs perform more efficiently than WoCs since cost efficiency scores are 0.965 and 0.958 on average, respectively. We found that water companies can become more cost efficient by managing assets more efficiently, extracting water from reservoirs, and investing in technologies that reduce water leakage and predict more accurately bursts in networks. The results of our study should be of great interest to water regulators and utility managers who want to make more informed management decisions to minimize costs, allocate resources efficiently and improve environmental performance. Future research will extend the years considered to assess the impact of recent regulatory reforms in the cost efficiency of the English and Welsh water companies.

Ownership, technology gap and technical efficiency of small and medium manufacturing firms in Vietnam: A stochastic meta frontier approach

Ownership, technology gap and technical efficiency of small and medium manufacturing firms in Vietnam: A stochastic meta frontier approach

Regional differences in technical efficiency and technological gap of Norwegian dairy farms: a stochastic meta-frontier model

ABSTRACTThis paper compares technical efficiencies (TEs) and technological gap ratios (TGRs) for dairy farms in regions of Norway, accounting for differences in working environments. We used the state-of-the-art stochastic meta-frontier approach to estimate TEs and TGRs to account for regional heterogeneity, and the ‘true’ random-effect model to account for farm effects. The dataset used was farm-level balanced panel data for 24 years (1992–2014), with 5442 observations from 731 dairy farms. The results of the analysis provide empirical evidence of small regional differences in TEs, TGRs, and input use. Furthermore, the results may provide support for the more regionally specific agricultural policy, in terms of support schemes and structural regulations.

Health care service provision in Europe and regional diversity: a stochastic metafrontier approach

■■■In the last decades, demographic change coupled with new and expensive medical innovations have put most health care systems in developed countries under financial pressure. Therefore, ensuring efficient service provision is essential for a sustainable health care system. This paper investigates the performance of regional health care services in six West European countries between 2005 and 2014. We apply a stochastic metafrontier model to capture the different conditions in the health care systems in the countries within the European Union. By means of this approach, it is possible to detect performance differences in the European health care systems subject to different conditions and technologies relative to the potential technology available. The results indicate that regional deprivation plays a key role for the efficiency of health care provision. Furthermore, a pooled model which assumes a similar technology for all countries cannot sufficiently account for differences between countries. Surprisingly, the Scandinavian regions lag behind other regions with respect to the metafrontier.JEL ClassificationC23, D61, I12, I18, R10