Estimating technical efficiency in the presence of farm heterogeneity: evidence from maize production in Ethiopia

Abstract

PurposeThe purpose of this paper is to measure technical efficiency and examine its determinants while disentangling unobserved time-invariant heterogeneity from actual inefficiency using comprehensive household-level panel data.Design/methodology/approachThis paper estimates technical efficiency based on the true random-effects stochastic production frontier estimator with a Mundlak adjustment. By utilising comprehensive panel data with 4,694 observations from 39 districts of four major maize-producing regions in Ethiopia, the author measures technical efficiency and examine its determinants while disentangling unobserved time-invariant heterogeneity from technical inefficiency. By using competing stochastic production frontier estimators, the author provides insights into the influence of farm heterogeneity on measuring farm efficiency and the subsequent impact on the ranking of farmers based on their efficiency scores.FindingsThe study results indicate that ignoring unobservable farmer heterogeneity leads to a downwards bias of technical efficiency estimates with a consequent effect on the ranking of farmers based on their efficiency scores. The mean technical efficiency score implied that about a 34% increase in maize productivity can be achieved with the current input use and technology in Ethiopia. The key determinants of the technical inefficiency of maize farmers are the age, gender and formal education level of the household head, household size, income, livestock ownership, and participation in off-farm activities.Research limitations/implicationsWhile the findings of this study are critical for informing policy on improving agricultural production and productivity, a few important things are worth considering in terms of the generalisability of the findings. First, the study relied on secondary data, so only a snapshot of environmental factors was accounted for in the empirical estimations. Second, there could be other sources of unmeasured potential sources of heterogeneity caused by persistent technical inefficiency and endogeneity of inputs. Third, the study is limited to one country. Therefore, future research should extend the analysis to ensure the generalisability of the empirical findings regarding the extent to which unmeasured potential sources of heterogeneity caused by persistent technical inefficiency, endogeneity of inputs and other unobservable country-specific features – such as geographical differences.Originality/valueThis paper contributes to the literature on agricultural productivity and efficiency by providing new evidence on the influence of unobservable heterogeneity in a farm efficiency analysis. While agricultural production is characterised by heterogeneous production conditions, the influence of unobservable farm heterogeneity has generally been ignored in technical efficiency estimations, particularly in the context of smallholder farming. The value of this paper comes from disentailing producer-specific random heterogeneity from the actual inefficiency.

Impact of credit access on farm performance: Does source of credit matter?

“…The results show decreased total factor productivity (TFP) in all countries due to decreased technical efficiency. Other studies show that socioeconomic factors affect technical efficiency [ 35 , 36 ], which affects TFP. For example, using sample data from 15 provinces in Indonesia, Ref.…”

Deoxynivalenol Induces Intestinal Epithelial Barrier Damage through RhoA/ROCK Pathway-Mediated Apoptosis and F-Actin-Associated Tight Junction Disruption

“…DON increases the permeability of the intestinal epithelial barrier, allowing bacteria, viruses, and endotoxins to enter the circulation and lead to sepsis . In addition, increased permeability of the intestinal epithelial barrier accelerates intestinal absorption of DON, leading to rapid systemic dissemination of large amounts of DON through the bloodstream, resulting in widespread organ toxicity. , …”

“…9 In addition, increased permeability of the intestinal epithelial barrier accelerates intestinal absorption of DON, leading to rapid systemic dissemination of large amounts of DON through the bloodstream, resulting in widespread organ toxicity. 10,11 The structure and function of the intestinal epithelial barrier are based on the intestinal epithelial cells and the tight junction (TJ) between them. 12 Apoptosis and TJ injury in intestinal epithelial cells are thought to be the main causes of exogenous toxicant-induced increases in intestinal epithelial barrier permeability.…”

Endogeneity, Heterogeneity and Determinants of Inefficiencies in Crop-producing Farmers: Empirical Evidence from Central Highlands of Ethiopia

“…However, the state of agriculture in Ethiopia including the grain crop sub-sector is progressively declining; and its productivity remains low as a result of numerous challenges -limited private investment, fragmented markets, environmental degradation and recurrent shocks (Neglo et al 2021). Moreover, the sector is characterized by inefficiencies and low productivity in which cereals have shown a steady low-growth rate in the last two decades (Geffersa 2023;Meja et al 2022). Hence, being an agriculture dependent country with limited capacity for developing and adopting new technologies, increasing production and enhancing farming efficiencies with the existing technologies is not a matter of choice but is instead a must for Ethiopia.…”

“…One of the potential drawbacks of these papers is that they are almost exclusively based on overall technical efficiency measures that do not distinguish between transient and persistent inefficiency. More importantly, though few studies have been emerging differentiating between transient and persistent efficiency components in Ethiopian farming context (Geffersa 2023;Meja et al 2022;Oumer et al 2022) none of them have applied to account for endogeneity and heterogeneity among Therefore, it is vital to perform a comprehensive analysis with recent efficiency models that account for unobserved farm-heterogeneity and endogeneity problems while estimating transient and persistent efficiency components distinctively, and identifying sources of inefficiency differentials. This paper aimed to bridge these gaps in literature by considering the most recent model the Generalized true random effects -Four error component stochastic frontier, panel data model; hereafter (GTRE-4eCSF panel data model) that disentangles farm-heterogeneity and endogeneity from inefficiency while estimating persistent and transient with their determinants for Ethiopia's major grain crop-producing farmers using a household-level panel dataset.…”