Intertemporal comparison of cost and technical efficiencies using a base period approach for the Korean rice industry

Abstract

Objectives of our study are to develop a procedure for intertemporal comparison of both technical and cost efficiency and estimate farm efficiency for the Korean rice industry from 2003 to 2017. The newly developed base‐year procedure excludes frontier shift and price effects from the standard procedure for intertemporal comparison. An adjusted central limit theorem for sample T‐tests is applied to avoid potential bias from efficiency scores by the Data Envelope Analysis. Our empirical results show that the two procedures yield different scores and trends. The standard approach indicates declining efficiency, while the base‐year method shows overall improvement in farm efficiency.