Factors affecting technical efficiency of rice farmers in village reservoir irrigation systems of Sri Lanka

Given the importance of water for rice production, this study examines the factors affecting the technical efficiency (TE) of irrigated rice farmers in village irrigation systems (VIS) in Sri Lanka. Primary data were collected from 460 rice farmers in the Kurunagala District, Sri Lanka, to estimate a stochastic translog production frontier for rice production. The mean TE of rice farming in village irrigation was found to be 0.72, although 63% of rice farmers exceeded this average. The most influential factors of TE are membership of Farmer Organisations (FOs) and the participatory rate in collective actions organised by FOs. The results suggest that enhancement of co-operative arrangements of farmers by strengthening the membership of FOs is considered important for increasing TE in rice farming in VIS.

Agricultural biodiversity, farm level technical efficiency and conservation benefits : an empirical investigation

The issues involved in agricultural biodiversity are important and interesting areas for the application of economic theory. However, very little theoretical and empirical work has been undertaken to understand the benefits of conserving agricultural biodiversity. Accordingly, the main objectives of this PhD thesis are to: (1) Investigate farmers’ valuation of agricultural biodiversity; (2) Identify factors influencing farmers’ demand for agricultural biodiversity; (3) Examine farmers’ demand for biodiversity rich farming systems; (4) Investigate the relationship between agricultural biodiversity and farm level technical efficiency. This PhD thesis investigates these issues by using primary data in small-scale farms, along with secondary data from Sri Lanka. The overall findings of the thesis can be summarized as follows. Firstly, owing to educational and poverty issues of those being interviewed, some policy makers in developed countries question whether non-market valuation techniques such as Choice Experiment (CE) can be applied to developing countries such as Sri Lanka. The CE study in this thesis indicates that carefully designed and pre-tested nonmarket valuation techniques can be applied in developing countries with a high level of reliability. The CE findings support the priori assumption that small-scale farms and their multiple attributes contribute positively and significantly to the utility of farm families in Sri Lanka. Farmers have strong positive attitudes towards increasing agricultural biodiversity in rural areas. This suggests that these attitudes can be the basis on which appropriate policies can be introduced to improve agricultural biodiversity. Secondly, the thesis identifies the factors which influence farmers’ demand for agricultural biodiversity and farmers’ demands on biodiversity rich farming systems. As such they provide important tools for the implementation of policies designed to avoid the loss agricultural biodiversity which is shown to be a major impediment to agricultural growth and sustainable development in a number of developing countries. The results illustrate that certain key household, market and other characteristics (such as agricultural subsidies, percentage of investment of owned money and farm size) are the major determinants of demand for agricultural biodiversity on small-scale farms. The significant household characteristics that determine crop and livestock diversity include household member participation on the farm, off-farm income, shared labour, market price fluctuations and household wealth. Furthermore, it is shown that all the included market characteristics as well as agricultural subsidies are also important determinants of agricultural biodiversity. Thirdly, it is found that when the efficiency of agricultural production is measured in practice, the role of agricultural biodiversity has rarely been investigated in the literature. The results in the final section of the thesis show that crop diversity, livestock diversity and mix farming system are positively related to farm level technical efficiency. In addition to these variables education level, number of separate plots, agricultural extension service, credit access, membership of farm organization and land ownerships are significant and direct policy relevant variables in the inefficiency model. The results of the study therefore have important policy implications for conserving agricultural biodiversity in Sri Lanka.

Technical efficiency of mainstream airlines and low-cost carriers : New evidence using bootstrap data envelopment analysis truncated regression

Between 2001 and 2005, the US airline industry faced financial turmoil while the European airline industry entered a period of substantive deregulation. Consequently, this opened up opportunities for low-cost carriers to become more competitive in the market. To assess airline performance and identify the sources of efficiency in the immediate aftermath of these events, we employ a bootstrap data envelopment analysis truncated regression approach. The results suggest that at the time the mainstream airlines needed to significantly reorganize and rescale their operations to remain competitive. In the second-stage analysis, the results indicate that private ownership, status as a low-cost carrier, and improvements in weight load contributed to better organizational efficiency.

The technical efficiency of the Japanese banks : non-radial directional performance measurement with undesirable output

The paper analyses technical efficiency of the Japanese banks from 2000 to 2007. The estimation technique is based on the Russell directional distance function that takes into consideration not only desirable outputs but also an undesirable output that is represented by non-performing loans (NPLs). The results indicate that NPLs remain a significant burden as for banks' performance. We show that banks' inputs have to be utilised more efficiently, particularly labour and premises. We also argue that a further restructuring process is needed in the segment of Regional Banks. We conclude that the Japanese banking system is still far away from being fully consolidated and restructured.

Heterogeneity on the technical efficiency in Japanese airports

This paper evaluates the production activities of Japanese airports by using a finite mixture model that allows controlling for unobserved heterogeneity. In doing so, a stochastic frontier latent class model, which allows the existence of different technologies, is adopted to estimate production frontiers. This procedure not only enables the identification of different groups of Japanese airports but also permits the analysis of their production efficiency. The main result is that there are two groups of Japanese airports, both following completely different "technologies" to obtain passengers and cargo, suggesting that business strategies need to be adapted to the characteristics of the airports. Some managerial implications are developed.

Technical efficiency, regulation and heterogeneity in Japanese airports

In this paper, the random stochastic frontier model is used to estimate the technical efficiency of Japanese airports, with regulation and heterogeneity included in the variables. The airports are ranked according to their productivity for the period 1987-2005 and homogeneous and heterogeneous variables in the cost function are disentangled. Policy implications are derived.

Implications of differences in technical efficiency of fishing boats for capacity measurement and reduction

Capacity measurement and reduction is a major international issue to emerge in the new millennium. However, there has been limited assessment of the success of capacity reduction schemes (CRS). In this paper, the success of a CRS is assessed for a European fishery characterised by differences in efficiency levels of individual boats. In such a fishery, given it is assumed that the least efficient producers are the first to exit through a CRS, the reduction in harvesting capacity is less than the nominal reduction in physical fleet capacity. Further, there is potential for harvesting capacity to increase if remaining vessels improve their efficiency.

Technical efficiency of blood component preparation in blood centres of 10 European countries

Various reasons, such as ethical issues in maintaining blood resources, growing costs, and strict requirements for safe blood, have increased the pressure for efficient use of resources in blood banking. The competence of blood establishments can be characterized by their ability to predict the volume of blood collection to be able to provide cellular blood components in a timely manner as dictated by hospital demand. The stochastically varying clinical need for platelets (PLTs) sets a specific challenge for balancing supply with requests. Labour has been proven a primary cost-driver and should be managed efficiently. International comparisons of blood banking could recognize inefficiencies and allow reallocation of resources. Seventeen blood centres from 10 countries in continental Europe, Great Britain, and Scandinavia participated in this study. The centres were national institutes (5), parts of the local Red Cross organisation (5), or integrated into university hospitals (7). This study focused on the departments of blood component preparation of the centres. The data were obtained retrospectively by computerized questionnaires completed via Internet for the years 2000-2002. The data were used in four original articles (numbered I through IV) that form the basis of this thesis. Non-parametric data envelopment analysis (DEA, II-IV) was applied to evaluate and compare the relative efficiency of blood component preparation. Several models were created using different input and output combinations. The focus of comparisons was on the technical efficiency (II-III) and the labour efficiency (I, IV). An empirical cost model was tested to evaluate the cost efficiency (IV). Purchasing power parities (PPP, IV) were used to adjust the costs of the working hours and to make the costs comparable among countries. The total annual number of whole blood (WB) collections varied from 8,880 to 290,352 in the centres (I). Significant variation was also observed in the annual volume of produced red blood cells (RBCs) and PLTs. The annual number of PLTs produced by any method varied from 2,788 to 104,622 units. In 2002, 73% of all PLTs were produced by the buffy coat (BC) method, 23% by aphaeresis and 4% by the platelet-rich plasma (PRP) method. The annual discard rate of PLTs varied from 3.9% to 31%. The mean discard rate (13%) remained in the same range throughout the study period and demonstrated similar levels and variation in 2003-2004 according to a specific follow-up question (14%, range 3.8%-24%). The annual PLT discard rates were, to some extent, associated with production volumes. The mean RBC discard rate was 4.5% (range 0.2%-7.7%). Technical efficiency showed marked variation (median 60%, range 41%-100%) among the centres (II). Compared to the efficient departments, the inefficient departments used excess labour resources (and probably) production equipment to produce RBCs and PLTs. Technical efficiency tended to be higher when the (theoretical) proportion of lost WB collections (total RBC+PLT loss) from all collections was low (III). The labour efficiency varied remarkably, from 25% to 100% (median 47%) when working hours were the only input (IV). Using the estimated total costs as the input (cost efficiency) revealed an even greater variation (13%-100%) and overall lower efficiency level compared to labour only as the input. In cost efficiency only, the savings potential (observed inefficiency) was more than 50% in 10 departments, whereas labour and cost savings potentials were both more than 50% in six departments. The association between department size and efficiency (scale efficiency) could not be verified statistically in the small sample. In conclusion, international evaluation of the technical efficiency in component preparation departments revealed remarkable variation. A suboptimal combination of manpower and production output levels was the major cause of inefficiency, and the efficiency did not directly relate to production volume. Evaluation of the reasons for discarding components may offer a novel approach to study efficiency. DEA was proven applicable in analyses including various factors as inputs and outputs. This study suggests that analytical models can be developed to serve as indicators of technical efficiency and promote improvements in the management of limited resources. The work also demonstrates the importance of integrating efficiency analysis into international comparisons of blood banking.

Role of Management Decision Variables in Determining Technology Progress and Technical Efficiency in Indian Electronic Industry

This paper analyses the influence of management on Technical Efficiency Change (TEC) and Technological Progress (TP) in the communication equipment and consumer electronics sub-sectors of Indian hardware electronics industry. Each sub-sector comprises 13 sample firms for two time periods.The primary objective is to determine the relative contribution of TP and TEC to TFP Growth (TFPG) and to establish the influence of firm specific operational management decision variables on these two components. The study finds that both the sub-sectors have strived and achieved steady TP but not TEC in the period of economic liberalisation to cope with the intensifying competition. The management decisions with respect to asset and profit utilization, vertical integration, among others, improved TP and TE in the sub-sectors. However, R&D investments and technology imports proved costly for TFP indicating inadequate efforts and/or poor resource utilisation by the management. Management was found to be complacent in terms of improving or developing their own technology as indicated by their higher dependence on import of raw materials and no influence of R&D on TP.

Technical efficiency in artisanal fisheries (AF) in Badagry local government area of Lagos State, Nigeria

This study examined the technical efficiency in artisanal fisheries in Lagos State of Nigeria. The study employed a two stage random sampling procedure for the selection of 120 respondents. The analytical techniques involved descriptive statistics and estimation of technical efficiency following maximum likelihood estimation (MLE) procedure available in FRONTIER 4.1. The MLE result of the stochastic frontier production function showed that hired labour, cost of repair and capital items are critical factors that influences productivity of artisanal fishermen with the coefficient of hired labour being highly elastic. This implies that employing more labour will significantly increase the catch in the study area. The predicted farm efficiency with an average value of 0.92 showed that there is a marginal potential of about 8 percent to increase the catch, hence the income of the fishermen. The study further examined the factors that influence productivity of fishermen in the study area. Year of education, mode of operation and frequency of fishing have important implication on the technical efficiency of fishermen in the study area.

Determinants of technical efficiency of freshwater prawn farming in southwestern Bangladesh

This paper estimates a translog stochastic production function to examine the determinants of technical efficiency of freshwater prawn farming in Bangladesh. Primary data has been collected using random sampling from 90 farmers of three villages in southwestern Bangladesh. Prawn farming displayed much variability in technical efficiency ranging from 9.50 to 99.94% with mean technical efficiency of 65%, which suggested a substantial 35% of potential output can be recovered by removing inefficiency. For a land scarce country like Bangladesh this gain could help increase income and ensure better livelihood for the farmers. Based on the translog production function specification, farmers could be made scale efficient by providing more input to produce more output. The results suggest that farmers’ education and non-farm income significantly improve efficiency whilst farmers’ training, farm distance from the water canal and involvement in fish farm associations reduces efficiency. Hence, the study proposes strategies such as less involvement in farming-related associations and raising the effective training facilities of the farmers as beneficial adjustments for reducing inefficiency. Moreover, the key policy implication of the analysis is that investment in primary education would greatly improve technical efficiency.

Estimating technical efficiency of Australian dairy farms using alternative frontier methodologies

Technical efficiency is estimated and examined for a cross-section of Australian dairy farms using various frontier methodologies; Bayesian and Classical stochastic frontiers, and Data Envelopment Analysis. The results indicate technical inefficiency is present in the sample data. Also identified are statistical differences between the point estimates of technical efficiency generated by the various methodologies. However, the rank of farm level technical efficiency is statistically invariant to the estimation technique employed. Finally, when confidence/credible intervals of technical efficiency are compared significant overlap is found for many of the farms' intervals for all frontier methods employed. The results indicate that the choice of estimation methodology may matter, but the explanatory power of all frontier methods is significantly weaker when interval estimate of technical efficiency is examined.

Examining the technical efficiency of rice producers in Bangladesh

Despite record national output in the early years of this decade there is widespread concern that rice yields in Bangladesh are below those attainable, and that given future population growth this may constrain achievement of food security and poverty reduction objectives. A frequent response to this problem is that farmers could close the gap between actual farm yields and potential yields identified in field trials if farmers who are technically inefficient could improve their current farming practices. This paper estimates and explains technical efficiency for a sample of rice farmers in Bangladesh employing Bayesian methods. The results provide insights into the distribution of technical efficiency and identify important influences on rice growing.

Profitability and technical efficiency of aquaculture systems in Pampanga, Philippines

We evaluate the profitability and technical efficiency of aquaculture in the Philippines. Farm-level data are used to compare two production systems corresponding to the intensive monoculture of tilapia in freshwater ponds and the extensive polyculture of shrimps and fish in brackish water ponds. Both activities are very lucrative, with brackish water aquaculture achieving the higher level of profit per farm. Stochastic frontier production functions reveal that technical efficiency is low in brackish water aquaculture, with a mean of 53%, explained primarily by the operator's experience and by the frequency of his visits to the farm. In freshwater aquaculture, the farms achieve a mean efficiency level of 83%. The results suggest that the provision of extension services to brackish water fish farms might be a cost-effective way of increasing production and productivity in that sector. By contrast, technological change will have to be the driving force of future productivity growth in freshwater aquaculture.

Application of a double bootstrap to investigation of determinants of technical efficiency of farms in Central Europe

The paper provides one of the first applications of the double bootstrap procedure (Simar and Wilson 2007) in a two-stage estimation of the effect of environmental variables on non-parametric estimates of technical efficiency. This procedure enables consistent inference within models explaining efficiency scores, while simultaneously producing standard errors and confidence intervals for these efficiency scores. The application is to 88 livestock and 256 crop farms in the Czech Republic, split into individual and corporate.