Input Disposability and Efficiency in Dutch Arable Farming

This paper develops a test for disposability of individual inputs based on non‐radial efficiency measures. Furthermore, the paper analyses the impact of congestion on overall technical efficiency for individual inputs. The application uses panel data from Dutch cash crop farms over the period 1989–1992. A significant difference between the efficiency measures under different assumptions on input disposability is detected by a t‐test, indicating that all inputs are weakly disposable. Analysis of the composition of overall technical efficiency reveals that weak disposability constitutes the largest component of inefficiency. Moreover, congested farms on average have a less effective management and operate on a larger, though less efficient, production scale.     

Developing farm-specific marginal abatement cost curves: Cost-effective greenhouse gas mitigation opportunities in sheep farming systems

Growing demand for agricultural produce, coupled with ambitious targets for greenhouse gas emissions reduction present the scientific, policy and agricultural sectors with a substantial mitigation challenge. Identification and implementation of suitable mitigation measures is driven by both the measures’ effectiveness and cost of implementation. Marginal abatement cost curves (MACCs) provide a simple graphical representation of the abatement potential and cost-effectiveness of mitigation measures to aid policy decision-making. Accounting for heterogeneity in farm conditions and subsequent abatement potentials in mitigation policy is problematic, and may be aided by the development of tailored MACCs. Robust MACC development is currently lacking for mitigation measures appropriate to sheep systems. This study constructed farm-specific MACCs for a lowland, upland and hill sheep farm in the UK. The stand-alone mitigation potential of six measures was modelled, against real farm baselines, according to assumed impacts on emissions and productivity. The MACCs revealed the potential for negative cost emissions’ abatement in the sheep industry. Improving ewe nutrition to increase lamb survival offered considerable abatement potential at a negative cost to the farmers across all farms while, lambing as yearlings offered negative cost abatement potential on lowland and upland farms. The results broadly advocate maximising lamb output from existing inputs on all farm categories, and highlight the importance of productivity and efficiency as influential drivers of emissions abatement in the sector. The abatement potentials and marginal costs of other measures (e.g. reducing mineral fertiliser use and selecting pasture plants bred to minimise dietary nitrogen losses) varied between farms, and this heterogeneity was more frequently attributable to differences in individual farm management than land classification. This has important implications for the high level policy sector as no two farms are likely to benefit from a generic one size fits all approach to mitigation. The construction of further case-study farm MACCs under varying farm conditions is required to define the biophysical and management conditions that each measure is most suited to, generating a more tailored set of sector-specific mitigation parameters.     

COMPARATIVE EFFICIENCY OF RICE FARMS IN CENTRAL LUZON,THE PHILIPPINES

The purpose of this paper is to estimate a bias-free agricultural production function with a view to examining efficiency differences among small rice farmers. Simultaneous equation bias is avoided if we assume that farmers maximise expected profits; specification bias, which commonly occurs when a management input is omitted from such functions, is circumvented by introducing farm-specific dummy variables into a combined cross-sectional and time-series data set. Applying this model to data for 32 Philippine rice farms between 1970 and 1979, rather small production-elasticities are obtained for the conventional inputs and an efficiency ranking of the farms is presented. Second stage analysis shows that differences in soil type, land tenure, education and access to credit are important factors explaining these efficiency differences.     

FRONTIER PRODUCTION FUNCTIONS AND THE MEASUREMENT OF TECHNICAL EFFICIENCY

A measure of relative producer performance is often useful for policy purposes and the concept of economic efficiency provides a theoretical basis for such a measure. Yet several authors argue that the concept of efficiency and conventional efficiency measures are meaningless for the evaluation of real-world performance. This paper examines some of the issues and argues that producers' performance may be measured using the concept of technical efficiency. Alternative technical efficiency measures are examined including those of Timmer (1971) and Kopp (1981). A frontier production function is estimated for a cross-section of North West farms and these two measures are computed under various assumptions on the fixity of agricultural inputs.     

Small U.S. dairy farms: can they compete?

The U.S. dairy industry is undergoing rapid structural change, evolving from a structure including many small farmers in the Upper Midwest and Northeast to one that includes very large farms in new production regions. Small farms are struggling to retain competitiveness via improved management and low‐input systems. Using data from USDA's Agricultural Resource Management Survey, we determine the extent of U.S. conventional and pasture‐based milk production during 2003–2007, and estimate net returns, scale efficiency, and technical efficiency associated with the systems across different operation sizes. We compare the financial performance of small conventional and pasture‐based producers with one another and with large‐scale producers. A stochastic production frontier is used to analyze performance over the period for conventional and pasture technologies identified using a binomial logit model. Large conventional farms generally outperformed smaller farms using most economic measures—technical efficiency, various profitability measures, and returns to scale.     

Farm size,relative efficiency and agrarian policy in Côte d'Ivoire: profit function analysis of rice farms

This paper examines the relative economic efficiency of small and large rice farms in Côte d'Ivoire using a profit function approach. No differences in the relative economic efficiency of small and large farms were found. This conclusion is robust under alternative model specifications. Agrarian reforms directed towards further concentration of landholding for large farms in Côte d'Ivoire cannot be justified based on economic efficiency. Results show that access to credit and use of modern rice varieties significantly increase profits. To improve technical efficiency of rice farms, an accelerated program to provide information, credit, improved seeds and other inputs is needed. When all the farms (i.e. large and small) are taken together, there is evidence of allocative inefficiency. Strategies are needed to remove such management related inefficiencies in rice production either through the development of a better market price information system or effective farmer-oriented technical training programs by rice extension workers.     

Market and Other Factors Affecting Farm Specific Production Efficiency in Pig Production in Vietnam

ABSTRACT

In developing country production environment, farm production efficiency is often measured in terms of on-farm resources and producer characteristics. In this paper we postulate that input and output market related factors also influence farm production decisions hence its efficiency. Stochastic frontier production function was used to assess technical efficiency and its determinants including input and output market variables for a sample of 1962 pig farms in Vietnam with data collected in 1999. There are significant differences in production behavior and efficiency level between the North and the South, among farms producing different breeds, between mixed and specialized farms, between household and commercial farms, and among producers located in different agro-ecological regions. Access to better output market, land size, herd size, and education of household head significantly reduced inefficiency, while access to government supplied inputs, age of household head, female headed households and family supplied crude feeds significantly increased inefficiency in both the regions. The direction of influence on efficiency differs between the two regions for access to credit, proportion of output sold at market rather than at farm gate and family labor supply. Generally, market related factors had more consistent influence on production efficiency in the South of Vietnam where the experience of market economics is longer compared to the North. Policy actions on providing better extension, more timely access to better quality inputs through the private sector, making credit more easily accessible to smallholders and opportunity to sell output at better priced secondary markets are expected to increase productivity and reduce inefficiency.     

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.     

Cost Efficiency for Alberta and Ontario Dairy Farms: An Interregional Comparison

In this study, two non-homothetic translog stochastic meta-frontier cost functions—with and without local concavity imposed—are estimated using a nonlinear maximum likelihood estimation procedure to compare the cost efficiency of Alberta and Ontario dairy farms for the period 1984–96. The resulting cost efficiency estimates are not very sensitive to whether or not curvature is imposed. In contrast, the properties of the cost and input demand functions (e.g., elasticities) are sensitive to imposition of local concavity during estimation. The implication is that if an inappropriate model that does not satisfy the properties required by the economic theory is used, the estimated input demand functions may not be reliable. Average cost efficiency for the pooled sample, with local concavity imposed, is approximately 89%. This suggests some potential for improved performance in the sector. The results also suggest that Ontario dairy farms may be more cost efficient than Alberta dairy farms, but the statistical evidence is inconclusive.     

甘肃省家庭林场经营效率比较分析

基于2018年甘肃省集体林改监测课题组实地调查数据,运用DEA模型对4种类型家庭林场的经营效率进行比较分析。结果表明:甘肃省家庭林场经营效率整体偏低,不同类型间存在较大差异,经营效率相对较高的是林下养殖型和多功能型家庭林场;各类型家庭林场投入变量都存在不同程度的冗余;家庭林场的经营效率和经营规模关联度不高,更多受技术因素影响。相对而言,种养结合型家庭林场经营面积在0～6.67 hm~2和20～33.33 hm~2,多功能型经营面积在6.67～10.31 hm~2和24.45～25.80 hm~2,能发挥集约优势或规模优势。因此,提出加强对家庭林场主的技术培训;鼓励有实力的家庭林场进行规模化、集约化发展;鼓励种植型家庭林场等拓展经营内容;打造多种功能经营,打造品牌特色等建议。     

Efficiency estimation in a profit maximising model using flexible production function

This paper uses a flexible (translog) production function to estimate efficiency of 227 farms from West Bengal, India. We consider estimation of technical and allocative inefficiencies using a profit maximising framework which accommodates both endogenous and exogenous inputs. The maximum likelihood method of estimation developed in this paper is based on the production function and the first-order conditions of profit maximisation. Farm-specific technical and allocative inefficiencies are also estimated. Empirical results show that the mean level of technical efficiency is 75.46% while the best farm is 85.87% efficient (technically). So far as allocative efficiency is concerned the majority of the farms are found to be under-users of the endogenous inputs, viz., fertiliser, manure, human and bullock labour.     

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.     

Evaluating the impact of agricultural extension on farms' performance in Crete: a nonneutral stochastic frontier approach

This article attempts to integrate the production‐ and the efficiency‐based approaches for evaluating the impact of extension on farms' performance. For this purpose the nonneutral production frontier model is used, and the empirical analysis refers to a sample of farms from Crete, Greece. The empirical results support the proposed formulation instead of either the production‐ or the efficiency‐based formulations as extension was found to have a statistically significant effect on closing both the technology and management gaps. Public and private extension services were found to be competitive in the production function and complementary in the technical inefficiency effect function. In addition, farms using both public and private extension services achieved a higher degree of technical efficiency than those using either public or private extension services, and farms with no extension services were found to be the least efficient.     

The Contribution of Financial Management Training and Knowledge to Dairy Farm Financial Performance

Cooperative Extension and other institutions (e.g., technical colleges, on-line self study programs, university short courses, etc.) frequently stress the importance of financial management education for successful farming operations. The research reported in this paper attempts to quantify the contributions of such training to the financial performance of dairy farms in Wisconsin. Our results suggest a link between a deeper understanding of financial concepts and greater financial returns but that it is a relatively weak one. Moreover, simple exposure to farm management training programs and self-confidence in farm financial decision-making ability are not significantly related to farm financial outcomes.     

Relationships between Technical Efficiency and Financial Management for Czech Republic Farms

This paper provides the first analysis of the relationship between farm financial structure and technical efficiency in Central and Eastern European farming during the transition to a market economy. First, technical efficiency scores for a sample of Czech farms are computed with data envelopment analysis, accounting for sampling variability by using the Simar and Wilson bootstrapping procedure. The confidence intervals show that corporate livestock farms are the most homogenous in terms of technical efficiency. Second, a Tobit model is applied for the investigation of factors, including financial considerations, which influence the variation in technical efficiency. The potential endogeneity of the financial variables in the explanation of efficiency is examined, following Smith and Blundell. The Amemiya estimator is used for those cases which are revealed as endogenous. The analysis indicates substantial differences in the way in which the different management structures are treated by lenders. De novo, individual farms are subject to stringent evaluation of their loan applications, which is not the case for the successors of the former collective and state farms.     

Can technology help achieve sustainable intensification? Evidence from milk recording on Irish dairy farms

This article explores the potential of a farm technology to simultaneously improve farm efficiency and provide wider environmental and social benefits. Identifying these ‘win-win-win’ strategies and encouraging their widespread adoption is critical to achieve sustainable intensification. Using a nationally representative sample of 296 Irish dairy farms from 2015, propensity score matching is applied to measure the impact of milk recording on a broad set of farm sustainability indicators. The findings reveal that the technology enhances economic sustainability by increasing dairy gross margin and milk yield per cow. Furthermore, social sustainability is improved through a reduction in milk bulk tank somatic cell count (an indicator of animal health and welfare status). Conversely, milk recording (as it is currently implemented) does not impact farm environmental sustainability, represented by greenhouse gas emission efficiency. While the study shows that milk recording is a ‘win-win’ strategy, ways of improving current levels of utilisation are discussed so that milk recording achieves its ‘win-win-win’ potential in the future.     

ALTERNATIVE PRODUCTION FRONTIER METHODOLOGIES AND DAIRY FARM EFFICIENCY

This paper estimates technical efficiency (TE) measures using four alternative production frontier models, and evaluates the sensitivity of the results to the choice of methodology. The Cobb-Douglas functional form along with data for 1982 and 1983 from 404 dairy farms located throughout six northeastern states in the US are used in the estimation. A general conclusion is that, broadly speaking, frontier function models are neutrally upwardly scaled versions of the OLS or average model. A second conclusion is that different models yield markedly different efficiency levels across firms. However, the correlation between the indexes from the various methods is high, which implies that the ordinal ranking of firms according to their measured level of technical efficiency appears to be independent of the method used for a given year. By comparison, the correlation between efficiency indexes for the same method across time, although positive, is much lower than the previous set of correlations. Correlation analysis of efficiency versus farm size and of efficiency versus returns over variable costs, based on the alternative models, yielded consistent results.     

TECHNICAL EFFICIENCY: A COMPARISON OF PRODUCTION FRONTIER METHODS

Recent differences in the measurement of farm efficiency may be related to the methods employed. Here, four alternative production frontiers are estimated using time-series, cross-section data for a sample of Illinois grain farms. Efficiency measures are found to be highly correlated between nonparametric methods, and between parametric methods. However, large differences are noted when efficiency measures are compared between nonparametric and parametric methods. An analysis of farms with large differences, which are efficient under the nonparametric method, indicates that correlations between efficiency measures are much higher when these firms are excluded.     

The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy

As a multi-objective policy, the EU Common Agricultural Policy continues to secure significant income support for farmers as one of the nine specific objectives. We estimate the income transfer efficiency of a broad set of pivotal policy measures, focusing on the effects of farm structure on income transfer efficiency. We use dynamic modelling, based on a micro-data panel of Italian farms for the period 2008–2014, allowing for endogeneity, simultaneity bias, and omitted variables. In line with previous studies and economic expectations, we find that decoupled direct payments provide the highest contribution to agricultural incomes, followed by agri-environmental payments and on-farm investment subsidies. Coupled payments have no significant impacts on farmers’ income. Generally, for all analysed Common Agricultural Policy measures, large farms benefit from greater transfer efficiency levels compared with medium and small farms. These differences among instruments and across farms suggest that policy-participation costs may play a pivotal role, together with the economic structure of farms, in determining the income transfer efficiency of CAP policies.     

Farm size and the determinants of productive efficiency in the Brazilian Center-West

This paper explores the determinants of technical efficiency, and the relationship between farm size and efficiency, in the Center-West of Brazil. This is the region where agricultural production and total factor productivity have grown the fastest since 1970. It is also a region characterised by unusually large farms. Technical efficiency is studied with Data Envelopment Analysis and county level data disaggregated by farm size and type of land tenure. The efficiency measure is regressed on a set of explanatory variables which includes farm size, type of land tenure, composition of output, access to institutions and indicators of technology and input usage. The relationship between farm size and efficiency is found to be non-linear, with efficiency first falling and then rising with size. Type of land tenure, access to institutions and markets, and modern inputs are found to be important determinants of the differences in efficiency across farms.