Are small‐scale rice farmers in eastern India really inefficient? Examining the effects of microtopography on technical efficiency estimates

The article analyzes how controlling for differences in land types (defined by position on a low‐scale toposequence) affects estimates of farm technical efficiency for rice farms in eastern India. Contrasting previous research, we find that farms are considerably more technically efficient when efficiency estimates are carried out at the plot level and control for plot characteristics rather than at the farm level without such controls. Estimates show farms cultivating modern varieties are technically efficient and plots planted with traditional varieties on less productive lands (upland and midupland) operate close to the production frontier. Significant technical inefficiency is found on more productive lands (medium and lowland plots) planted with traditional rice varieties. The finding that these smallholder rain‐fed rice farms are efficient cultivators on some plots contrasts with previous findings of farm‐level inefficiency (i.e., rejects overarching explanations linked to farm operator ignorance or lack of motivation) and suggests more complex explanations are required to address the inefficiency that is present.     

Utilising farm-level panel data to estimate climate change impacts and adaptation potentials

We combine farm accounting data with high-resolution meteorological data, and climate scenarios to estimate climate change impacts and adaptation potentials at the farm level. To do so, we adapt the seminal model of Moore and Lobell (2014) who applied panel data econometrics to data aggregated from the farm to the regional (subnational) level. We discuss and empirically investigate the advantages and challenges of applying such models to farm-level data, including issues of endogeneity of explanatory variables, heterogeneity of farm responses to weather shocks, measurement errors in meteorological variables, and aggregation bias. Empirical investigations into these issues reveal that endogeneity due to measurement errors in temperature and precipitation variables, as well as heterogeneous responses of farms toward climate change may be problematic. Moreover, depending on how data are aggregated, results differ substantially compared to farm-level analysis. Based on data from Austria and two climate scenarios (Effective Measures and High Emission) for 2040, we estimate that the profits of farms will decline, on average, by 4.4% (Effective Measures) and 10% (High Emission). Adaptation options help to considerably ameliorate the adverse situation under both scenarios. Our results reinforce the need for mitigation and adaptation to climate change.     

The heterogeneous farm‐level impact of the 2005 CAP‐first pillar reform: A multivalued treatment effect estimation

This article aims to evaluate the impact of the 2005 reform of the Common Agricultural Policy (CAP) on farm production choices as a treatment effect (TE). This impact is measured through alternative metrics of the short‐term changes of the output vector. The heterogeneity of the response to the reform is assessed by estimating both average and quantile TE. As this heterogeneous response may depend on the different farm‐level CAP support, a multivalued treatment approach is adopted and applied to treated units (i.e., supported farms). This approach is applied to a balanced panel of Italian FADN farms observed over years 2003–2007. Results show that the 2005 reform of the first pillar of the CAP actually had an impact in (re)orienting short‐term farm production choices but this response is largely heterogeneous and concentrated in the lower levels of support.     

Specialization,diversification, and productivity: a panel data analysis of rice farms in Korea

This article examines the microeconomics of productivity associated with specialization/diversification in production activities, with an application to Korean rice farms. Korean rice farms tend to be very small and highly specialized. Our analysis examines the productivity effects associated with both farm size and farm specialization/diversification in Korean agriculture. Relying on farm‐level panel data, the analysis studies farm productivity in a multi‐input multi‐output context, accounting not only for changes in inputs and technical change in rice production, but also for the role of diversification in the production of other crops in current and previous periods. We find positive but small productivity gains from farm diversification. These gains come mostly from complementarity effects across farm outputs, with minimal effect of scale economies. The positive complementarity effects work against nonconvexity effects, which provide strong productivity incentives for rice farms to specialize.     

Technical efficiency in paddy farms of Tamil Nadu: an analysis based on farm size and ecological zone

Despite the wider application of efficiency analysis in Indian agriculture, little has been done on the investigation of intra and interecological variations, size differences and their interactions. However, ecological issues have paramount implications for the low-input sustainable agricultural production. Furthermore, due to the various causes of efficiency, the age-old size-based debate on efficiency differences is not yet resolved. The present study examines the level of technical efficiency across ecological zones and farm size groups in paddy farms of the southern Indian state of Tamil Nadu. The study showed that 90% of the variation in output among paddy (IR-20) farms in the state is due to differences in technical efficiency. Land, animal power and fertilisers have significant influence on the level of paddy production. Varying from 0.59 to 0.97, the mean technical efficiency was found to be 0.83. The use of F-test in two-way analysis of variance (ANOVA) and censored regression (Tobit model), with dummies for ecological zones, farm size groups and their interactions, has shown that, at mean level, the level of technical efficiency among paddy farms of the state differs significantly across agro-ecological zones and size groups as well, The study further indicated that small-sized paddy farms in zone II and medium-sized paddy farms in zone III are represented by ecologically size-biased production techniques; thus achieving higher technical efficiency.     

Analysing Production Technology and Risk in Organic and Conventional Dutch Arable Farming using Panel Data

This paper compares the production technology and production risk of organic and conventional arable farms in the Netherlands. Just–Pope production functions that explicitly account for output variability are estimated using panel data of Dutch organic and conventional farms. Prior investigation of the data indicates that within variation of output is significantly higher for organic farms, indicating that organic farms face more output variation than conventional farms. The estimation results indicate that in both types of farms, unobserved farm‐specific factors like management skills and soil quality are important in explaining output variability and production risk. The results further indicate that land has the highest elasticity of production for both farm types. Labour and other variable inputs have significant production elasticities in the case of conventional farms and other variable inputs in the case of organic farms. Manure and fertilisers are risk‐increasing inputs on organic farms and risk‐reducing inputs on conventional farms. Other variable inputs and labour are risk increasing on both farm types; capital and land are risk‐reducing inputs.     

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.     

Generalized Moments Estimation for Spatial Panel Data: Indonesian Rice Farming

We consider estimation of a panel data model where disturbances are spatially correlated in the cross-sectional dimension, based on geographic or economic proximity. When the time dimension of the data is large, spatial correlation parameters may be consistently estimated. When the time dimension is small (the usual panel data case), we develop an estimator that extends the cross-sectional model of Kelejian and Prucha . This approach is applied in a stochastic frontier framework to a panel of Indonesian rice farms where spatial correlations represent productivity shock spillovers, based on geographic proximity and weather. These spillovers affect farm-level efficiency estimation and ranking.     

Tropospheric Ozone and Winter Wheat Production in England and Wales: A Note

Tropospheric ozone is an air pollutant thought to reduce crop yields across Europe. Much experimental scientific work has been completed or is currently underway to quantify yield effects at ambient ozone levels. In this research, we seek to directly evaluate whether such effects are observed at the farm level. This is done by intersecting a farm level panel dataset for winter wheat farms in England & Wales with information on ambient ozone, and estimating a production function with ozone as a fixed input. Panel data methods, Generalised Method of Moments (GMM)techniques and nested exogeneity tests are employed in the estimation. The results confirm a small, but nevertheless statistically significant negative effect of ambient ozone levels on wheat yields.     

土地流转背景下农户经营规模与土地生产率关系再审视——来自固定粮农和地块的证据

农户经营规模和土地生产率关系是发展经济学领域的经典议题之一。本文在土地流转加速发展的背景下讨论了我国农户经营规模扩大对土地生产率的影响以及测量两者之间关系面临的种种干扰。除了农户规模本身的作用外,理论和实证检验均表明存在土地流转市场时不同规模农户在土地生产率上的差异还可能源于农户和土地的异质性,譬如土地更多流向经营能力强的农户、流转多劣地等等。基于固定农户的固定地块数据可以有效控制异质性的实证策略,本文利用4个省两期跟踪调查数据对两者关系进行了再检验。研究发现,来自固定农户固定地块的证据表明农户土地经营规模扩大并不会影响粮食单产,而不控制固定地块时往往会得到两者负相关的伪结论,并且仅控制固定农户时上述伪结论更为明显。这一结果意味着不必担心规模经营会威胁粮食供给。     

Profitability and Efficiency of High Nature Value Marginal Farming in England

The UK Brexit vote triggered a new wave of policy developments for a future outside the EU. In this context, we analyse the business performance of English hill and upland farms, characterised by marginal economic conditions but also high nature value (HNV). The analysis aims to help identify farm-level management and policy options for greater economic, environmental and social sustainability. Business performance is measured as technical efficiency and the occurrence and persistence of abnormal profits, estimated through stochastic frontier analysis and static and dynamic panel-data methods. The results help indicate rationales for recent trends including farm enlargement, farm family diversification, and agri-environment scheme entry. The single farm payment is found to be negatively associated with farm technical efficiency while agri-environmental subsidies were positively associated to short-term farm profitability. Farm adaptation and resilience during a period of likely turbulence in external circumstances is discussed in light of these findings, as well as potential parallels with marginal HNV areas across Europe.     

Government Payments and Farm Business Survival

Using farm-level panel data from recent U.S. Agricultural Censuses, this study examines how direct government payments influence the survival of farm businesses, paying particular attention to the differential effect of payments across farm-size categories. A Cox proportional hazards model is used to estimate the effect of government payments on the instantaneous probability of a farm business failure, controlling for farm and operator characteristics. Results indicate that an increase in government payments has a small but statistically significant negative effect on the rate of business failure, and the magnitude of this effect increases with farm size.     

The costs and benefits of land fragmentation of rice farms in Japan*

Land fragmentation, in which a farm operates multiple, separate plots of land, is a common phenomenon in Japan and many other countries. Usually, land fragmentation is regarded as a harmful phenomenon as it increases production costs and reduces the advantages of scale economies. However, it is also known that fragmentation may have beneficial effects in reducing risk through spatial dispersion of plots. Thus, land fragmentation has both costs and benefits, and whether it is beneficial or harmful is determined by the magnitude of these costs and benefits. This article investigates the costs and benefits of land fragmentation empirically using panel data from Japanese rice farms. The empirical results reveal that fragmentation increases production costs and offsets economies of size, and these impacts strengthen as farm size increases. Moreover, although fragmentation does reduce production risk, its monetary value is far below the cost of land fragmentation. From these findings, we conclude that land fragmentation is an impediment to efficient rice production in Japan.     

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.     

Farm-level efficiency and productivity measurement using panel data: wool production in south-west Victoria

In this article we explore some issues surrounding the use of farm-level efficiency and productivity estimates for benchmarking studies. Using an eight-year balanced panel of Victorian wool producers we analyse annual variation between estimates of farm-level technical efficiency derived using Data Envelopment Analysis and Malmquist estimates of Total Factor Productivity. We find that farms change their relative rank in terms of efficiency across years. Also, unlike aggregate studies of Total Factor Productivity, we find at best erratic and modest growth, a worrying result for this industry. However, caution is needed when interpreting these results, and for that matter, benchmarking analysis as currently practised when using frontier estimation techniques like Data Envelopment Analysis.     

Technical Efficiency among Peasant Farmers Participating in Natural Resource Management Programmes in Central America

This study examines the extent to which technical efficiency (TE) is related to activities promoted by two natural resource management programmes recently completed in Central America. Data for a total of 639 farms operating in the hillsides of El Salvador and Honduras are used to estimate a household‐level input‐oriented stochastic distance frontier simultaneously with a TE effects model. The main finding of this study is that improvements in TE are financially beneficial to farm households while also contributing to environmental sustainability. The results also reveal a positive association between productivity and output diversification, and a positive relationship between TE and off‐farm income, human capital and agricultural extension.     

Off‐farm work and technical efficiency on U.S. dairies

In this study, we investigate the impact of an increase in farm households’ off‐farm work on technical efficiency (TE) of U.S. dairies. We present a theoretical framework that implies that an increase in farm household off‐farm work decreases TE. We use two nationally‐representative samples of U.S. dairies (2010 and 2005 Agricultural Resource Management Surveys) and a parametric approach (stochastic frontier analysis) to empirically test the hypothesis. Results are generally consistent with the hypothesis and show that an increase in off‐farm work by the farm household is associated with a significant decrease in TE. In addition, results show that there is a statistically significant difference in TE between small, medium, and large farms. Small farms are associated with significantly higher off‐farm work and have lower TE than large farms, which implies that less off‐farm work by households with larger farms is at least partially responsible for the evidence of economies of scale in the U.S. dairy industry.     

Measuring the effect of farmland preservation on farm profitability

Purchase of development rights (PDR) programs have been created in 27 states to preserve farmland resources. These programs seek to advance several societal objectives, including the protection of farmland from development, retention of rural amenities, and promotion of the economic viability of farming. Using New Jersey farm-level data, this study evaluates whether participation in a state PDR program improves farm profitability. The propensity score matching method is used to correct for selection bias arising from the voluntary nature of these programs. No statistically significant profit differential is found between preserved and observationally equivalent unpreserved farms in our full sample of 4029 farms. When the analysis is replicated across different farm types, we find weak evidence that the profitability of preserved residential lifestyle/retirement farms is lower than that observed for their unpreserved equivalents. In contrast, we find that small farms (<$100,000 in annual sales) operated by individuals for whom farming is a principal occupation earn $414 to $436 more per acre in profit than their observationally equivalent unpreserved counterparts.     

Productivity and farm size in Australian agriculture: reinvestigating the returns to scale

A positive relationship between farm size and farm productivity is often considered to be largely due to increasing returns to scale in farm production. However, using farm‐level data for the Australian broadacre industry, we found that constant or mildly decreasing returns to scale is the more typical scenario. In this study, the marginal returns to various farm inputs are compared across farms with different sizes. We found that large farms achieved higher productivity by changing production technology rather than increasing scale alone. The results highlight the disparity between ‘returns to scale’ and ‘returns to size’ in the industry, suggesting that productivity improvement among smaller farms can be made through increasing their ability to access advanced technologies, rather than simply expanding their scale.     

Estimating Farm Productivity Differentials using Panel Data: The Hausman‐Taylor Approach

This paper investigates the relation between unobserved farm productivity and other production factors in a system of netput equations for specialised pig breeding farms in the Netherlands. In order to estimate the system, a Hausman‐Taylor panel data estimator is developed for a system of equations with unbalanced panel data. Tests on the correlation between model variables and farm‐effects are performed, yielding an insight into the sources of differences in total factor productivity and its components (e.g. managerial ability and scale economies). Results indicate that specialised pig breeding farms that are characterised by high total factor productivity have more buildings and machinery than farms with low total factor productivity.