Stochastic Frontier Production Research Articles

Technical Efficiency in Swine Production Under Different Waste Management Techniques

In spite of the enormous benefits derivable from pig production, farmers are yet to fully maximize output due largely to inefficiency in the use of resources. An empirical study was carried out to examine the technical efficiency of resource use in swine production under different waste management strategies. Multistage sampling procedure was employed to select 60 farmers and primary data were obtained with the aid of questionnaire. Using the stochastic production frontier function based on the Cobb- Douglas form, asymptotic parameter estimates were evaluated to describe efficiency determinants. Result revealed that the most vital factors influencing technical efficiency across the pig farms were labour, medication and stocking density whereas the most critical explainers of inefficiency across all the pig farms were farming experience, access to credit and extension contact. The average efficiency for pig farmers that bury, dump and compost waste were 0.87, 0.88 and 0.74 respectively while the mean efficiency across all the pig farms was 0.80. The fact that all the pigs farms had mean efficiencies of less than one is indicative that none of the pig farms reached the frontier threshold in production. Thus, within the context of efficient agricultural production, pig farmers could still increase their output using appropriate technologies and the right resource-mix.

The impact of IT spillovers on technical efficiency: The role of IT intensity and supply chain relationships

This study examines the impact of information technology (IT) spillovers from suppliers and customers on an industry's technical efficiency and evaluates how such impact is moderated by its IT intensity and supply chain relationships. We employ a two-stage stochastic production frontier approach to estimate the relationship between IT spillovers and technical efficiency in U.S. industries. The findings show that the benefits from suppliers' and customers' IT spillovers in improving technical efficiency are greater in more IT-intensive industries, in industries that are more dependent on suppliers or customers in their production, and in industries that are more concentrated than their suppliers.

Operational values of information technology and green initiatives: the stochastic production frontier approach

Previous studies regarding environmental issues in the field of Information Technology (IT) focused on the direct impact of IT on the environment and indicated a trade-off relationship between them. This study employs the resource-based view (RBV), theory of production, and stochastic production frontier (SPF) approach to empirically investigate the operational value creating power of IT and green initiatives at firm, industry, and sector level, providing evidence that the presence of IT and green initiatives can positively contribute to operational performance. Our findings suggest that the complementarity phenomenon exist between green initiatives and IT. Furthermore, this study shows detailed information on how IT and green initiatives contribute to operational performance in different ways, provides managers and decision makers a guideline for IT and green initiative investment decision-making, and develops a more realistic stochastic production frontier model for researchers to apply.

Analysis of the impact of land tenure security on agricultural productivity in Burkina Faso

This article analyses the causal link between secured land property rights and farm productivity through investment channels using data from the 2011/2012 agricultural season provided by the ministry in charge of agriculture. The productivity is estimated from a stochastic production frontier, and an appropriate interval regression model is used to deal with endogeneity. We found that cereal producers have an average level of technical efficiency (TE) of approximately 0.37 units. This productivity can be improved by 0.17 units if the plots are secure. The results also revealed that multicropping, access to credit and water and soil conservation techniques are factors that have positive effects on producers' TE. However, the producers' TE is negatively affected by the quality of the seed.

TECHNICAL EFFICIENCY DYNAMICS IN SMALLHOLDING CASSAVA-BASED FARMING IN RURAL NIGERIA

Dynamics of production efficiency is a key factor in assessing resource-use patterns and production growth. Raising technical efficiency of smallholder farmers in rural areas would not only increase their income but also stimulate the rest of the economy. This study therefore assessed movement of smallholder farmers in and out of technical efficiency regime over time in Nigeria. Panel data from Living Standard Measurement Survey was analysed using stochastic production frontier model, Markov chain and multinomial logit model. Farm size, labour, cassava cuttings and the use of pesticides, significantly influenced the productivity of cassava production while age squared, household size, no access to extension services and membership of a cooperative society reduced the efficiency of the farming households. A higher percentage (64.83%) of cassava farms under mono-cropping system were efficient in 2010/2011, while a large proportion of about 92.91% were inefficient in 2015/2016. Further, the rate of entry into technical inefficiency (31.32%) was more than the rate of exit from technical inefficiency (14.89%). Transition into technical inefficiency was explained by age, age squared, farm size, gender, household size, marital status, secondary school education and farming systems. In the long run, the probability that rural cassava farmers will be technically efficient was higher than that of being technically inefficient in the future.

Investigating the Link Between Human Health and Technical Efficiency: A Case Study of Oil Palm Processors in Nigeria

The relationship between health status and technical efficiency cannot be over-emphasized although most researchers in the past have failed to recognize the possibility of an existing relationship between these variables. This study examined the cost implication of illnesses and their effect on the technical efficiency of oil palm processors in Edo State. A multistage sampling procedure was used to select 210 oil palm fruit processors in the study area. Data were analyzed using frequency counts, percentages, Cost-of-Illness estimation and Stochastic Production Frontier Analysis (SPF). Results revealed that the major illnesses experienced by the processors were malaria (100.0%), cough and catarrh (100.0%), back pain (98.8%), skin rash (78.9%) and nausea (76.6%). The estimated cost of illness was N165,338.80 with total time cost contributing 97.02% of this value for the period under consideration. SPF revealed that the mean technical efficiency of the oil palm processors was 0.75. Furthermore, palm fruits (β = 0.662, p<0.01), the volume of water used (β = 0.180, p<0.05), labor (β = 0.415, p<0.01) and processing experience (β = -0.110, p<0.05) increased the production of palm oil, while days of incapacitation (β = 0.445, p<0.01) increased technical inefficiency. The study concluded that illnesses had a negative influence on the technical efficiency of oil palm processors. The study recommended that stakeholders should create awareness of a healthy lifestyle and practical ways to maintain good health while ensuring continuous production.

Technical efficiency of maize-based farm irrigators in the Eastern Cape province: a stochastic frontier model approach

Maize production is the most important field crop in South Africa produced from ancient years, Mpumalanga and North West Provinces being principal producers. Maize is extensively produced and ascendancy ground crop because maize is greater resilient, less labor exhaustive, rich in food strength and starches, grows actual fast, and easy to produce as other ground crops. Most of the produced maize in South African is consumed domestically. Despite massive extents of arable land and all-inclusive land reform implemented for 25 years, farmers in the former homeland areas of South Africa cultivate only small food plots where they grow mostly maize and a small variety of vegetables. The aim of this paper was to examine the technical efficiency of maize-based farmers who farm within smallholder irrigation schemes. A multi-stage sampling procedure was used to select 120 maize-based irrigation farmers. Descriptive statistics and stochastic production frontier models were used in the study. Maize production in the study area was dominated by males (78%) with an average age of 60 years and an average family size of 4 people in the household. Smallholder irrigators have primary education meaning farmers were literate and able to access farming information and interpret it. Farmers have a minimum average of 10 years of farming experience. Smallholder maize-based farmers were efficient in using their resources given their high farm productivity. The level of technical efficiency for maize farming was 84% which indicates that 16% of maize yield was not realized by smallholder maize farmers in the study area. The study recommends that the government and private sector must improve the farm techniques such as manure and enhanced seeds prepared early and accessible at small and affordable expenses to upsurge maize productivity.

Measuring the economic efficiency performance in Latin American and Caribbean countries: An empirical evidence from stochastic production frontier and data envelopment analysis

The development of the global economy has raised concerns about economic efficiency and productivity. In this context, understanding the concepts of economic efficiency and productivity and the knowledge of the techniques available for their measurement are also of fundamental importance. Thus, the objective of the present study is to measure the economic efficiency performance of 14 countries from the Latin America and the Caribbean (LAC) region in the period from 1990 to 2017. Analysing the economic performance of these countries with linear Cobb-Douglas production function, two methods were used: the parametric stochastic frontier analysis (SFA) and non-parametric data envelopment analysis (DEA). Both approaches (SFA and DEA) show that Panama is the most economically efficient country in the LAC region, followed by Chile. Concerning other countries, the choice between the SFA and DEA models affects the ratings. Results indicate that Brazil (SFA) and Nicaragua (DAE) are the least economically efficient LAC countries.

Measuring Technical Efficiency of the Smallholder Crop Farms Using Stochastic Production Frontier Approach

Agricultural productivity in Africa is the lowest in the world with many households not being able to feed themselves. In Africa, women play a major role in agriculture sector constituting about 70–80 per cent of the labour force there. Regrettably, their farm productivity is relatively low mainly due to their inefficient use of farm inputs, which has a serious implication for their socio-economic condition as well as health and nutrition status. With this backdrop in mind, the study investigated the technical efficiency (TE) of the female crop farmers in Niger Delta, Nigeria. Stochastic production frontier approach and ANOVA models were applied to analyse the primary data collected on the 216 female farmers randomly selected from 18 communities of the 3 states in the Delta. It has been found that the farm size and the quantity of labour positively influence TE of these farmers. However, farmer’s age shows a negative sign implying a decrease in technical inefficiency in age whereas the years of schooling shows a positive sign implying an increase in inefficiency with schooling thereby a resulting decrease in TE with schooling. Farm efficiency level in Delta and Akwa Ibom States was not significantly different. However, TE level in both Delta and Akwa Ibom States was significantly different from Rivers State. Since, the age of farmers showed positive influence on TE, farmers should form group and organise regular meetings to enable share knowledge and experiences on the efficient use of farm resources in the Niger Delta Region, Nigeria.

Economic effects of climate change on agricultural production and productivity in Latin America and the Caribbean (LAC)

AbstractClimate projections indicate that temperatures in Latin America and the Caribbean (LAC) will rise by between 1.6 °C and 4 °C by the end of the century while changes in precipitation levels are expected to vary significantly across the region. This article estimates the impact of climate change on total factor productivity (TFP) and production. It combines data from the University of East Anglia's Climatic Research Unit (CRU), the Intergovernmental Panel on Climate Change (IPCC), and the Food and Agriculture Organization (FAO) on 28 LAC countries for a 54‐year period (1961–2014) in order to inform policy makers of the cost of output losses in the absence of viable climate adaptation strategies. We use estimates of a random‐parameter stochastic production frontier (SPF) model specification to capture heterogeneity in technology and partial output elasticities across countries and unobserved environmental characteristics. Results show that change in output is mainly driven by an average annual TFP growth rate of .95%. Climate change induces significant reductions (9.03–12.7%) in productivity over the 2015–2050 period. In terms of output, these losses range from USD $14.7 to $31.4 billion dollars in the LAC region, depending on the scenario and the discount rate used.

Interpreting Stochastic Frontier Model as Random Coefficient Model and Vice Versa

Abstract This note explores the relationship between the stochastic frontier model and the random coefficient regression model. It shows how to interpret the former as a special case of the latter and vice versa. JEL classification numbers: C13, C51, D24. Keywords: Stochastic production frontier, Random coefficient regression, Composite error, Technical inefficiency.

Measuring Efficiency in the Summer Olympic Games Disciplines: The Case of the Spanish Athletes

This paper estimates the technical efficiency of Olympic disciplines in which Spanish athletes participate, taking into account the results obtained in the last three Olympic Games. A stochastic production frontier model (normal-exponential), using two control variables linked to economic factors such as budget and sports scholarships, is estimated in order to obtain different Olympic sports’ efficiencies distinguished by gender, using data from 2005 to 2016. The results detect some differences among the considered disciplines. In all the cases, athletics, canoeing, cycling, swimming, and tennis, depending on the gender, reach better values. This paper’s novelty lies in the efficiency analysis carried out on the Olympic disciplines and athletes of a country and not on the country’s efficiency, which allows managers and stakeholders to decide about investments concerning disciplines and athletes.

Does the adoption of emerging technologies improve technical efficiency? Evidence from Korean manufacturing SMEs.

Despite the proliferation of innovative technologies during the Fourth Industrial Revolution (4IR), there is a severe lack of quantitative and empirical studies that deal with the effectiveness of recently emerging technologies. This study examines the impact of employing core technologies of the 4IR on small and medium enterprises (SMEs). We used the firm-level cross-sectional data on Korean manufacturing SMEs, including the information on technology utilization. The stochastic production frontier estimation with selectivity correction is employed, besides matching technique to obtain unbiased estimates on technology efficiency. The empirical analysis finds that adopting emerging technologies enhances the productivity of SMEs. After observed and unobserved factors are controlled, the technical efficiency of adopters is higher by more than 26% on average, compared to non-adopters. Moreover, if the gap among production frontiers is considered, the difference in productivity would rise further. Additionally, a strategic alliance is a crucial route for SMEs to accept new technologies.

Production Efficiency of Sesame Producer Farm Households: The Case of Bench Maji Zone, Southwest Ethiopia

Motives: Agricultural sector in Ethiopia is characterized by its poor performance, despite the livelihoods of the large population of the country depends on agriculture. Sesame is an important cash crop and plays vital role in the livelihood of many people in Ethiopia. However a number of challenges hindered the development of sesame sector along with the productivity. Aim: This study attempted to analyze production efficiency of sesame producers in Bench Maji Zone of Southwest Ethiopia. The study used both primary and secondary data sources. Purposive sampling techniques were employed to draw 270 sesame producer farm households. Descriptive statistics and econometric models were used to analyze the data. Results: The estimated stochastic production frontier model indicated that input variables such as inorganic fertilizer, sesame seed, oxen power, labor and chemicals found to be important factors in increasing the level of sesame output in the study area. The result further revealed significant differences in production efficiency among sesame growing farmers in the study area. Applying the Cobb-Douglas functional form the average, technical, allocative and economic efficiencies found are 50.72%, 86.83% and 44.2% for sesame producers, respectively. Also among fourteen variables used in the analysis of determinants, experience in sesame farming, education level, farm income, total cultivated land, social responsibility, frequency of extension contact, participation in off/nonfarm activities, credit, proximity to market and soil fertility were found to be significant sources of technical, allocative and economic inefficiencies of sesame producer farmers. Strengthening education, extension service, credit access at affordable interest rate and accessibility of transport services and motivating farm household to participate different training as well as their experience sharing with other sesame producing farmers improve productivity of sesame production. Therefore, those important socioeconomic and institutional factors which are mentioned above must take into account to improve the productivity of sesame in the study area.

An Analysis of Technical Efficiency of Vegetables’ Household Production in Mongolia

Vegetable production is one important agricultural product in crop production after wheat and potatoes production in Mongolia. Currently, household production dominates in total vegetable production (approximately 80 percent). Thus, the purposes of this paper were to measure technical efficiency and to determine influencing factors inefficiency on vegetable household production in Mongolia by using Stochastic production frontier analysis (SFA). Primary data was collected from randomly selected 260 vegetable households of Mongolia in 2019. The empirical result indicated that the average technical efficiency of the sampled vegetable household was 64.6 % (range between 43.2% and 99.9%) or they lost about 35.4% of the potential output due to technical inefficiency. We found that land and labor are the main influencing input factors of the household’s vegetable production. Also, the result of the technical inefficiency model, variables of age, sex, experience, and credit use obtained a negative relationship with inefficiency. The other variables are family size, education level, land fragmentation index was positively affected by technical inefficiency.

Impact of grassland transfer on technical efficiency of livestock production in Northern China

ABSTRACT This paper estimates the impact of grassland transfer on the technical efficiency of livestock production, using the cross-sectional data collected from herders in Northern China. The propensity score matching approach and selectivity-corrected stochastic production frontier model are employed to address the selection bias issues. The empirical results show that, on average, the average technical efficiency score of herders with grassland transfer is significantly higher than that of herders without grassland transfer, which are 0.56 and 0.41, respectively, after addressing both observed and unobserved selection biases. The livestock revenue is positively and significantly affected by forage grass use, machinery use, stocking rate, family and hired labours use, and veterinary investment. Our findings highlight the importance of facilitating grassland transfer to increase livestock production efficiency and boost farm performance.

ENVIRONMENTAL EFFICIENCY ANALYSIS IN RICE PRODUCTION: A CASE STUDY IN TRA VINH PROVINCE OF VIETNAM

Rice farmers do not recognize the negative impacts of overusing agricultural chemicals in farming activities on the environment. Hence, this study aimed to estimate technical and environmental efficiency for the rice producers in Tra Vinh province of Vietnam using the translog stochastic production frontier approach. Nutrients of NPK and pesticide cost were assumed to be environmentally detrimental inputs for environmental efficiency estimation. Empirical results indicated that the mean technical efficiency score was 0.74 showing technical inefficiency in the sample farms. The average environmental efficiency indexes were 0.55 for two detrimental inputs, 0.51 for nutrients of NPK, and only 0.10 for pesticide alone, indicating that the rice farms have huge potential to decrease the use of these inputs. The reduction in fertilizer, especially pesticide use, will help the rice farmers achieve higher profitability and be more sustainable. Regarding determinants of farms’ efficiencies, the regression analysis revealed that participating in agricultural cooperatives has emerged to be a favorable factor associated with technical and environmental efficiency, suggesting that the development of agricultural cooperative models should be prioritized to promote and encourage farmers’ participation. The present study results could be seen as key points for farmers' adjustment in rice production, leading to a safer environment and a driving force in the sustainable agriculture development in the Mekong Delta of Vietnam.

Production environment and managerial techniques in explaining productivity growth in Brazilian beef cattle production

AbstractBrazil is a key player in the global beef markets having generated 15% of global production, and approximately 20% of world exports in 2018. Productivity improvements will be indispensable if the Brazilian beef sector wants to maintain its position as a key player in both the domestic and international markets. In light of the aforementioned, this study makes two key contributions to the agricultural productivity literature on Brazil. First, it estimates the production technology used in the Brazilian beef cattle sector using stochastic production frontier methods that account for exogenous factors that impact the production environment. Second, using the estimated coefficients as weights, it decomposes a total factor productivity (TFP) index that tracks various sources of productivity growth including: technical efficiency, technological change, scale efficiency, and environmental efficiency. By utilizing farm‐level data this study generates deeper insights into the dynamics driving beef cattle production at the most disaggregated level. Results indicate that TFP growth averaged 1.73% per annum and was primarily driven by scale efficiency, which increased at 1.39%. Meanwhile, technical efficiency declined at a rate of −0.03% per annum. [EconLit Citations: D24, O13, Q15].

Do organic fertilizer impact on yield and efficiency of rice farms? Empirical evidence from Bangladesh

Organic fertilizer is one of the critical elements of organic and sustainable agricultural development. This study analyzes the economic impact of organic fertilizer on rice farms' yield and technical efficiency (TE) in Bangladesh. The Stochastic Production Frontier (SPF) approach has been employed by using a sample of 2652 rice plots covering seven broad agro-ecological zones of Bangladesh. It also addresses self-selection into the organic fertilizer choice using propensity score matching (PSM) that corrects observed selection bias that potentially influences both decisions to choose and technical efficiency. After PSM, organic fertilizer users produce 16.67% higher yield by using 12.1%, 9.40%, and 42.1% less labor, other inputs, and farm capital for rice production. The organic fertilizer users are significantly 3.79% more efficient than non-user, suggesting organic fertilizer substantially contributes to enhancing the technical efficiency of rice in Bangladesh. Moreover, the average treatment effect on the treated (ATETs) in different matching is positively significant and confirms the positive impact of organic fertilizer on rice farming. Government and non-government organizations should encourage farmers to extensively use organic fertilizer for better production through soil health development and reduce the pressure of chemical fertilizer import and use.

Economic Efficiency Soybean Production: The Case of Smallholder Farmers in Pawe Woreda, Ethiopia: Parametric Approach

This study was initiated with the objective of assessing economic efficiency of soybean production. A multistage sampling technique was employed to select 203 soybean farm households randomly from Pawe Woreda, Metekel zone, Benishangul-Gumuz Regional State, Ethiopia. Parametric stochastic production frontier approach was used to estimate technical, allocative and economic efficiency levels, whereas Tobit model was used to identify factors affecting economic efficiency. The mean technical, allocative and economic efficiencies were 72.72%, 35.378% and 25.05%, respectively, indicating there was significant amount of economic inefficiency in production. The Tobit model result showed that important factors that affected technical, allocative and economic efficiency are age, level of education, extension service, access for credit, farming experience, off/non-farm income participation and training. Based on the findings the following recommendations are forwarded. Government should devote a great effort on a reduction in the interest rate, bureaucracies and collaterals of banks on loans which will facilitate credit accessibility to smallholder farmers, strengthening and establishing both formal and informal type of framers education and strengthen the existing agricultural extension system. Keywords: Pawe woreda, soybean, efficiency, Cobb-Douglas, Tobit DOI: 10.7176/JESD/12-15-01 Publication date: August 31 st 2021