Agglomeration externalities, productivity, and technical inefficiency

Agglomeration externalities can have positive effects on both the production possibility frontier and technical inefficiency of firms. Increased levels of localized knowledge spillovers and substitution of internal inputs with external inputs may lead to fewer errors in decision-making and execution of production tasks, thus causing firms to become technically more efficient relative to the production frontier. When we estimate a stochastic frontier production model on a large panel of salmon aquaculture farms, we find econometric support for positive agglomeration externalities on both the production frontier and technical inefficiency

A study of technical inefficiencies of maize farmers within and outside the new agricultural extension program in the Harari region of Ethiopia

In 1994/95 Ethiopia launched a new agricultural intensification program based on the experience gained from the programs of the past and the success of the SG 2000 agricultural project in achieving higher yields in the subsistence sector. Stochastic frontier production functions were estimated for a sample of maize farmers within and outside the New Extension Program in order to study their technical inefficiencies and identify some of the factors contributing to variations in the productivity of maize farmers in the Harari Region of Ethiopia. It is found that there were technical change and changes in technical inefficiencies of maize farmers between 1994/95 and 1997/98. The average technical efficiency of maize farmers was 73 per cent and factors such as agricultural extension, formal education, and off-farm incomes were important factors affecting the technical inefficiencies of maize farmers within the program. We concluded that policies enhancing the managerial and decision-making capacity of maize growers contributed towards increasing their technical efficiencies and the objective of achieving increased maize production

Technology Gap, Efficiency, and a Stochastic Metafrontier Function

This paper considers a stochastic metafrontier function to investigate the technical efficiencies of firms in different groups that may not have the same technology. A decomposition of output is presented involving the technology gap and technical efficiency ratios for firms in a group relative to the best practice in the industry

The Effects of Production Inputs, Technical Inefficiency and Biological Risk on Jasmine and Non-Jasmine Rice Yields in Thailand

Both Jasmine and non-Jasmine rice yields in Thailand are substantially lower than their respective average world rice yields. Sources of yield variations in both kinds of rice, i.e., production inputs, technical inefficiency and other factors, are investigated in this study. Factors affecting technical inefficiency of production are analyzed simultaneously with the estimation of the production frontiers using the method of maximum likelihood. Cobb-Douglas stochastic yield frontiers are used to investigate policy implications. The crucial factors influencing Jasmine rice yields are technical inefficiency, chemical fertilizer, labor, transplanting, irrigation, severe drought and neck blast, whereas for non-Jasmine rice, the same factors are significant, except for labor, neck blast, and transplanting, but other chemicals had a significantly positive effect. Factors negatively affecting technical inefficiency for non-Jasmine rice are the ratio of male labor to total labor and experience reflected by the age of the farmers, while labor influences in the positive direction. For Jasmine rice, only the male-labor ratio significantly influences technical inefficiency

The Impact of Agricultural Loans on the Technical Efficiency of Rice Farmers in the Upper North of Thailand

Rice is the major crop in Thailand and it will remain so as long as it continues to be the major export crop and the staple food of the Thai population. However, the fact is that, although Thailand is the main rice-exporting country in the world, its rice yields are among the lowest in Asia (Office of Agricultural Economics, 2004a, b). This might imply low productivity and high technical inefficiency in major rice production. In an attempt to resolve this problem, the Thai government has promoted the use of inputs in rice production, such as chemical fertiliser, high-yielding varieties and chemicals, to increase the yields. The total amount of chemical fertiliser that was imported increased from about 1.3 million tonnes in 1985 to 3.9 million tonnes in 2004, with an annual growth rate of 4.6%. The value of imported chemical fertiliser also increased with a higher annual growth rate of 8.7%. The increasing use of chemical fertiliser and chemicals whose prices have been rising continuously has resulted in substantial increases in production costs. ... This paper aims to answer two questions: how has rural credit contributed to the production of rice? and how do agricultural loans from the rural financial institutions affect the technical efficiency of rice farmers? This study is based on data from farmers in Chiang Mai and Chiang Rai provinces which are the main areas for major rice production in the Upper North sub-region. The results from this study will be useful for determining the government policies on rural financial institutions. This paper is set out as follows: Sect. 2 provides an overview of the rural financial institutions. Section 3 presents survey data on rice farmers and model specifications. Section 4 discusses the results from the translog stochastic frontier production function. The last section provides policy implications and conclusions

A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies

This paper presents a metafrontier production function model for firms in different groups having different technologies. The metafrontier model enables the calculation of comparable technical efficiencies for firms operating under different technologies. The model also enables the technology gaps to be estimated for firms under different technologies relative to the potential technology available to the industry as a whole. The metafrontier model is applied in the analysis of panel data on garment firms in five different regions of Indonesia, assuming that the regional stochastic frontier production function models have technical inefficiency effects with the time-varying structure proposed by Battese and Coelli (1992)

Metafrontier frameworks for the study of firm-level efficiencies and technology ratios

This paper uses the concept of a metafrontier to compare the technical efficiencies of firms that may be classified into different groups. The paper presents the basic analytical framework necessary for the definition of a metafrontier, shows how a metafrontier can be estimated using non-parametric and parametric methods, and presents an empirical application using cross country agricultural sector data. The paper also explores the issues of technological change, time-varying technical inefficiency, multiple outputs, different efficiency orientations, and firm heterogeneity

Agriculture, food insecurity and agricultural policy in Ethiopia

Since 1980, Ethiopia has been struggling to feed its growing population, despite the fact that agriculture is the mainstay of its economy. A number of government initiatives aimed at raising food production and ensuring national food security have made little progress in achieving their objectives. This paper identifies some of the implications of the new agricultural intensification programme, focusing on the technical efficiency and productivity of maize growers in the Harari region of Ethiopia for food insecurity and agricultural development policies. The paper concludes that there is scope to improve the technical efficiency of maize farmers and enhance their socioeconomic situation in the Harari region