Measuring technical efficiency in the stochastic varying coefficient frontier model

Due to the assumption that the best practice methods refer to each input separately instead of the whole set of inputs used by a firm, the benchmark technology as defined in the stochastic varying coefficient frontier model may be infeasible and theoretically improper whenever the maximum response coefficients are not coming from the same production unit. To overcome this problem, we propose alternative measures of output-oriented and single-factor technical efficiencies inspired from the maximum likelihood formulation of the nonneutral frontier model. The empirical results indicate that there are significant differences between the two in terms of the estimated efficiency scores but not significant differences we detected in terms of the efficiency ranking.     

Spatial dependency and technical efficiency: an application of a Bayesian stochastic frontier model to irrigated and rainfed rice farmers in Bohol,Philippines

We investigated the role of spatial dependency in the technical efficiency estimates of rice farmers using panel data from the Central Visayan island of Bohol in the Philippines. Household‐level data were collected from irrigated and rainfed agro‐ecosystems. In each ecosystem, the geographical information on residential and farm‐plot neighborhood structures was recorded to compare household‐level spatial dependency among four types of neighborhoods. A Bayesian stochastic frontier approach that integrates spatial dependency was used to address the effects of neighborhood structures on farmers’ performance. Incorporating the spatial dimension into the neighborhood structures allowed for identification of the relationships between spatial dependency and technical efficiency through comparison with nonspatial models. The neighborhood structure at the residence and plot levels were defined with a spatial weight matrix where cut‐off distances ranged from 100 to 1,000 m. We found that spatial dependency exists at the residential and plot levels and is stronger for irrigated farms than rainfed farms. We also found that technical inefficiency levels decrease as spatial effects are more taken into account. Because the spatial effects increase with a shorter network distance, the decreasing technical inefficiency implies that the unobserved inefficiencies can be explained better by considering small networks of relatively close farmers over large networks of distant farmers.     

鲤科鱼类池塘养殖技术效率的研究

本文应用随机边界产量函数对我国鲤科鱼类池塘养殖的技术效率进行了分析。通过对全国7个省283个渔场的鲤科鱼类池塘养殖生产情况的分析，表明我国鲤科鱼类池塘养殖总体技术效率水平较高，平均技术效率水平达到70．8％。本文还对影响技术效率的主要因子进行了分析，并就如何进一步提高我国水产养殖生产的技术效率进行了探讨。     

Measuring technical efficiency of Spanish pig farming: Quantile stochastic frontier approach

The pig meat production plays a significant role in the Spanish agrofood system. The assessment of the efficiency performance with which farmers are operating is necessary to define adequate policy and management strategies. In this context, this study aimed to determine the technical efficiency (TE) performance of pig farms and to examine the key factors that may affect the production system in Spain. To do so, the analysis relies on the quantile stochastic frontier model using a sample of Spanish pig farms. Results show a significant difference between production frontier parameters across the selected quantiles, which support the relevance of using the quantile regression approach. The optimal quantile for the stochastic frontier indicates an average TE level of 75%. In addition, empirical findings suggest that pig farmers in Spain give more importance to the adoption of high technology to improve their economic and technical performance as well as their competitiveness at the European pig market.     

Estimating technical efficiency under unobserved heterogeneity with stochastic frontier models: application to northern German dairy farms

This article uses panel data estimation techniques to examinetechnical efficiency of individual dairy farms in northern Germany.To the extent that agricultural production is characterisedby heterogeneous production conditions, estimation techniquesthat do not account for unobserved heterogeneity produce biasedefficiency estimates. We therefore estimate a number of conventionalpanel data models and Greene's recently proposed ‘true’random-effects model, as well as an extension of the model toascertain the effects of different specification on the productionfunction and efficiency estimates. Our results appear to supporttheoretical expectations and previous findings according towhich a specification that is both time-variant and also controlscorrelations between unobserved heterogeneity and the explanatoryvariables avoids heterogeneity bias and thus ensures consistentefficiency estimates.     

Technical efficiency and impact of environmental regulations in farrow-to-finish swine production in Taiwan

This article demonstrates how technical efficiency and the impact of environmental regulations of Taiwanese farrow‐to‐finish swine production can be estimated in the presence of undesirable outputs. The issue of measuring technical efficiencies while considering undesirable outputs has been addressed by past studies. But the proper method of including undesirable outputs has always been a subject of debate. This article develops a data envelopment analysis (DEA)‐based model that includes undesirable outputs. The technologies of desirable output production and undesirable output control are considered simultaneously. This allows one to transform undesirable output into desirable output, whereby a traditional Shephard distance function can be used to measure technical efficiencies. An approach to measuring the impacts due to environmental regulations is then derived. Empirical results show that larger farms are more technically efficient than small‐sized farms, but no clear conclusions can be reached for the measures of regulatory impact among farms with different sizes. On average, the sample farms incurred an opportunity cost due to environmental regulations equivalent to 9.8% of market value. Opportunity costs rise with efficiency.     

Technical efficiency relative to a stochastic cost frontier for the England and Wales dairy sector

It has been acknowledged in the literature that productive efficiency in grain production in China has substantially improved in the post-reform period, particularly in the early 1980s. Since then, there have been several policy changes in China, which have affected the growth of the sector. Specifically, the spectacular growth of rural industries has attracted significant physical and human capital from agriculture. It is in this context that Brown's warning of China soon becoming the world's number one importer of grain has raised an important question of whether China has reached its grain production potential. Analysis of the 1994 farm household survey data indicates that the majority of the sample farmers is reasonably technically efficient in grain production but that productivity can be increased further even with the existing technology.     

Off‐farm work,technical efficiency,and rice production risk in Taiwan

This article investigates the differences in yield production, production efficiency, and yield risk for farmers both with and without off‐farm work. Using a nationwide survey of rice farmers in Taiwan, we estimate two stochastic production frontier models that accommodate technical inefficiency and production risk simultaneously for farmers both with and without off‐farm work. The stochastic dominance criterion is then applied to compare the differences in the distributions of the estimated technical efficiency and yield risk between groups. The empirical results indicate that these two groups of farmers use resources in different ways, and off‐farm work is not necessarily associated with lower technical efficiency. For farmers in the lower percentiles of the efficiency distribution, those with off‐farm work are more efficient than their counterparts without off‐farm work. In addition, farmers with off‐farm work face higher production risk and this result is robust for the entire distribution.     

中国水产养殖技术效率测算及分析

论文运用随机前沿分析法对2007-2015年我国29个省市的水产养殖技术效率进行了测算,在此基础上进一步分析了各投入要素的产出弹性以及技术效率的影响因素。研究结果表明,2007-2015年我国水产养殖平均技术效率为0.6871,整体水平较高。我国水产养殖整体处于规模报酬递减阶段,但三种投入要素弹性总和大体上呈现递增的趋势。从时间上看,劳动力产出弹性和中间消耗产出弹性各年均为正值,养殖面积投入要素的产出弹性各年均为负值。从空间上看,不同地区的各投入要素产出弹性差异较大。水产品的加工率、水产品净出口率、人均水产养殖面积以及技术推广机构的数量对技术效率具有显著影响。     

Migration and technical efficiency in cereal production: evidence from Burkina Faso

This article uses a double bootstrap procedure and survey data from Burkina Faso in a two‐stage estimation to explore ways in which continental and intercontinental migration determine efficiency in cereal production of rural households. Findings suggest that continental migration has a positive relation and intercontinental migration no relation with technical efficiency. For continental migrant households, migration has removed surplus male labor, a cause for inefficiency in production. Intercontinental migration leads to a gender imbalance in the household, which cannot be compensated for by investments in farm equipment. The failure of intercontinental migration to transform cereal production from traditional to modern is attributed to an imperfect market environment.     

Sawmill production in the interior of British Columbia: A stochastic ray frontier approach

We examined the productive efficiency of the interior sawmilling industry in British Columbia using stochastic frontier analysis. Prior sawmilling studies using this method have neglected the multi-output nature of sawmills. To accommodate both lumber and chips as outputs, we used a ray production function and adopted it into the stochastic frontier framework. A translog functional form was specified with three inputs (i.e., capital, labour, and roundwood) and applied to five years (2003–2007) of mill specific production data. The ray production function is flexible allowing factor productivity to vary with the output mix. Results indicated the presence of both economies of scale and technical inefficiency. This suggested that a long-run equilibrium had not yet been reached during this time and might explain recent restructuring occurring in this region.     

Outsourcing and efficiency: the case of Spanish citrus farming

Outsourcing in agriculture has traditionally been seen as a managerial strategy of smaller farms to achieve higher levels of efficiency. In this article, we provide empirical evidence supporting the existence of a positive relationship between outsourcing and efficiency in Spanish citrus farming. Outsourcing is measured by the proportion of outsourced labor and capital in farms' total use of these production factors, i.e., the higher the proportion of outsourced inputs, the higher the degree of outsourcing. Making use of data envelopment analysis techniques, we compute input‐specific reductions required to achieve technical efficiency at the farm level. Our results show that attainment of technical efficiency leads to a reduction in the use of both farms' own and outsourced production factors. Furthermore, the degree of outsourcing increases as farms move to their technically efficient productive plans. In addition, outsourcing labor and capital allows farms to achieve efficiency regardless of their size. In our view, this result has a clear implication for policy makers. Instead of trying to improve Spanish citrus farms' competitiveness by pursuing an increase of their average size, policy measures should be adopted to enhance farmers' managerial skills and the efficiency of those external service firms and co‐operatives that are effectively performing basic cultivation tasks.     

Frontier production functions and technical efficiency: a survey of empirical applications in agricultural economics

The modelling and estimation of frontier production functions has been an important area of econometric research during the last two decades. Försund, Lovell and Schmidt (1980) and Schmidt (1986) present reviews of the concepts and models involved and cite some of the empirical applications which had appeared to their respective times of publication. This paper seeks to update the econometric modelling of frontier production functions associated with the estimation of technical efficiency of individual firms. A survey of empirical applications in agricultural economics is an important part of the paper.     

Performance of primary education in Burkina Faso: a multi-output stochastic frontier analysis

Primary education plays an important role in the development of human capital in developing countries. Consequently, Burkina Faso has taken steps to ensure both access to, and better quality of, primary education. However, comparisons between the different provinces of Burkina Faso reveal that there is a greater disparity between provinces in terms of access to, and the quality of, education, than there is in the provision of resources. Therefore, the objective of this study is to examine the efficiency of the resources used in providing primary education in Burkina Faso. We apply a stochastic frontier model in order to estimate the efficiency with which the 45 provinces of Burkina Faso provide primary education. The proposed model not only allows two outputs for primary education to be included, but also provides for an assessment of the factors that may affect inefficiency. Our results indicate that, overall, the primary education system in Burkina Faso operates at an efficiency level of approximately 63%. In addition, the living conditions of the population, as well as some factors internal to the education system, appear to have a relationship with the efficiency of primary education in the various provinces of Burkina Faso.     

Sheep as capital goods and farmers as portfolio managers: a bioeconomic model of Scandinavian sheep farming

A model analyzing the economics of sheep farming is formulated. The basic idea is simple. Sheep are capital and they are held by farmers as long as their capital value exceeds their slaughter, or meat, value. Farmers are therefore portfolio managers aiming to find the optimal combination of different categories of animals. Yields are compared with the yields from other assets. The model is formulated within a Northern Scandinavian economic and biological setting with a crucial distinction between the outdoors grazing season and the indoors season, and with adult sheep and lambs being different categories. In the first step, the management problem is analyzed with only the meat income of the farmers taken into account. In the next step, income from wool production is considered as well. The analysis provides several results that differ from standard harvesting theory.     

Further generalization of Faustmann's formula for stochastic interest rates

Markov decision process (MDP) models generalize Faustmann's formula by recognizing that future stand states, prices, and interest rates, are not known exactly. Buongiorno (Forest Science 47(4) 2001) presents a dynamic programming and a linear programming formulation of the MDP model with a fixed interest rate. Both formulations are generalized here to account for a stochastic interest rate. The objective function is the expected present value of returns over an infinite horizon. It gives, like Faustmann's formula, the value of the land and the eventual standing trees. The changes between stand states, prices, and interest rate, are represented by Markov chains. Faustmann's formula is a special case where the change from one state to another has 0 or 1 probability, and the interest rate is constant. The MDP model applies to any stand state, even- or uneven-aged, and the best decisions are tied uniquely to the current system state. An example shows the effects of recognizing variations in interest rate on the land expectation value, and the cost of ignoring them.     

Soil conservation and technical efficiency among hillside farmers in Central America: a switching regression model*

The main objective of this paper is to evaluate and analyse technical efficiency (TE) levels for hillside farmers under different levels of adoption of soil conservation in El Salvador and Honduras. A switching regression model is implemented to examine potential selectivity bias for high and low level adopters, and separate stochastic production frontiers, corrected for selectivity bias, are estimated for each group. The main results indicate that households with above-average adoption show statistically higher average TE than those with lower adoption. Households with higher adoption have smaller farms and display the highest partial output elasticity for land. Constraints in the land and credit markets are likely explanations for these differences. In addition, all estimated models show that TE has a positive and significant association with education and extension.