Endogeneity, heterogeneity, and determinants of inefficiency in Norwegian crop-producing farms

Lien, Gudbrand; Kumbhakar, Subal C.; Alem, Habtamu

doi:10.1016/j.ijpe.2018.04.023

Cited by 69 publications

(130 citation statements)

References 60 publications

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“…First, we considered data availability. Second, we considered the literature available on the subject; for instance, [4,10,23]. Thus, the dynamic production technology was modeled in terms of two outputs and five inputs (land, labour, materials, capital assets, and gross investments).…”

Section: Datamentioning

confidence: 99%

“…In the economics literature, there are several approaches to measuring and evaluating the performance of an agricultural system, including the Bayesian stochastic frontier approach [7], the semi-parametric approach [8], and the stochastic data envelopment analysis (DEA) approach [9], although these are not commonly used in empirical studies. There are two main approaches to measuring and evaluating the performance of an agricultural system in empirical studies: a parametric approach, such as the stochastic frontier approach (SFA), and a non-parametric approach, such as data envelopment analysis (DEA) [10]. In both methods, the basis for performance measurement is the radial contraction or expansion connecting inefficient observed points with the reference points on the production frontier [4,11].…”

Section: Introductionmentioning

confidence: 99%

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The Role of Technical Efficiency Achieving Sustainable Development: A Dynamic Analysis of Norwegian Dairy Farms

Alem

2021

Sustainability

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Growing environmental concerns have prompted governments to make sustainable choices in agricultural resource use. Evaluating the sustainability of agricultural systems is a key issue for the implementation of policies and practices aimed at revealing sustainability. This study aimed to evaluate the performance of Norwegian dairy farms, accounting for marginal effects of environmental (exogenous) variables. We adopted the dynamic parametric approach within the input distance function framework to estimate the performance of Norwegian dairy farms, focusing on the technical efficiency and determinates. For comparison, we also estimated the static parametric model, which was used by previous studies. We used unbalanced farm-level panel data for the period 2000–2018. The result shows a mean technical efficiency score of 0.92 for the dynamic model and 0.87 for the static models. The empirical result shows that the previous studies that focused on the static model reported a biased result on the performance of dairy farms. The dynamic efficiency score suggests that Norwegian dairy farms can reduce the input requirement of producing the average output by 8% if the operation becomes technically efficient. The environmental variables have a different effect on the performance of the farmers; thus, policymakers need to place special focus on these variables for the sustainable development of the dairy sector.

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Section: Datamentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The Role of Technical Efficiency Achieving Sustainable Development: A Dynamic Analysis of Norwegian Dairy Farms

Alem

2021

Sustainability

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“…In addition to estimating CE for each crop farm, it is useful to learn about factors that affect cost inefficiency between and within farms (Lien et al, 2018). The first SFA models that dealt with modeling the impact of exogenous variables (z-variables) on the level of inefficiency between and within farms are those of Kumbhakar et al (1991) and Reifschneider and Stevenson (1991).…”

Section: Approaches To Measuring Farm Performancementioning

confidence: 99%

“…Many variables that could affect crop management, such as skill, education level, soil type and slope or aspect of the farmland, were not available in our data set, so could not be included. Second, we considered the literature available on the subject, for example, Latruffe et al (2004), Bozoğlu, and Ceyhan (2007) and Lien et al (2018). As a result, we chose the following variables:…”

Section: Empirical Model Specificationmentioning

confidence: 99%

“…Off-farm activity, direct subsidy and entrepreneurial orientation were found to have negative effects on technical efficiency, while farm managers with more experience were likely to be more efficient than those with fewer years of farm experience. Lien et al (2018) estimated technical efficiency of the Norwegian crop-producing farms observed from 1993 to 2014 and reported that the mean technical efficiency was 0.82-0.88. Moreover, off-farm work was found to decrease technical efficiency while direct subsidy payments had a positive and statistically significant effect on technical efficiency.…”

Section: Introductionmentioning

confidence: 99%

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Economic performance and efficiency determinants of crop-producing farms in Norway

Alem

Lien

Hardaker

2018

IJPPM

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Purpose-The purpose of this paper is to explore the economic performance of Norwegian crop farms using a stochastic frontier analysis. Design/methodology/approach-The analysis was based on a translog cost function and unbalanced farm-level panel data for 1991-2013 from 455 Norwegian farms specialized in crop production in eastern and central regions of Norway. Findings-The results of the analysis show that the mean efficiency was about 78-81 percent. Farm management practices and socioeconomic factors were shown to significantly affect the economic performance of Norwegian crop farms. Research limitations/implications-Farmers are getting different types of support from the government and the study does not account for the different effects of different kinds of subsidy on cost efficiency. Different subsidies might have different effects on farm performance. To get more informative and useful results, it would be necessary to repeat the analysis with less aggregated data on subsidy payments. Practical implications-One implication for farmers (and their advisers) is that many of them are less efficient than the estimated benchmark (best performing farms). Thus, those lagging behind the best performing farms need to look at the way they are operating and to seek out ways to save costs or increase crop production. Perhaps there are things for lagging farmers to learn from their more productive farming neighbors. For instance, those farmers not practicing crop rotation might be well advised to try that practice. Social implications-For both taxpayers and consumers, one implication is that the contributions they pay that go to subsidize farmers appear to bring some benefits in terms of more efficient production that, in turn, increase the supply of some foods so possibly making food prices more affordable. Originality/value-Unlike previous performance studies in the literature, the authors estimated farm-level economic performance accounting for the contribution of both an important farm management practice and selected socioeconomic factors. Good farm management practices, captured through crop rotation, land tenure, government support and off-farm activities were found to have made a positive and statistically significant contribution to reducing the cost of production on crop-producing farms in the Central and Eastern regions of Norway.

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What kinds of subsidies affect technical efficiency? The case of Italian dairy farms

Agostino,

Comert,

Demaria

et al. 2023

Agribusiness

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The relationship between subsidies and the technical efficiency of farms has important policy implications. The impact on efficiency can depend on the type of grant. Here, three macrocategories of subsidy are distinguished. With reference to a large sample of Italian dairy farms, the macrocategory of rural development payments is further broken down according to the main types of subsidy received. A stochastic frontier analysis based on the Farm Accountancy Data Network reveals a heterogeneous influence of these categories. Subsidies coupled with production are associated with greater efficiency. Decoupled grants have a negative influence on efficiency when pursuing agri‐environmental policy objectives, and no impact on efficiency when supporting the income of farms or promoting the transfer of knowledge and competitiveness. [EconLit Citations: C13, Q12].

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Endogeneity, heterogeneity, and determinants of inefficiency in Norwegian crop-producing farms

Cited by 69 publications

References 60 publications

The Role of Technical Efficiency Achieving Sustainable Development: A Dynamic Analysis of Norwegian Dairy Farms

The Role of Technical Efficiency Achieving Sustainable Development: A Dynamic Analysis of Norwegian Dairy Farms

Economic performance and efficiency determinants of crop-producing farms in Norway

What kinds of subsidies affect technical efficiency? The case of Italian dairy farms

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