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The effect of crop insurance in Ecuadorian rice farming: a technical efficiency approach

Author

Listed:
  • Marcelo Castro
  • Alvaro Reyes Duarte
  • Andrés Villegas
  • Luis Chanci

Abstract

Purpose - The aim of this study is to estimate the technical efficiency of the massive and economically important crop of rice in Ecuador, and then conduct a comparison between groups of farmers with and without insurance. Design/methodology/approach - The authors use an input-oriented data envelopment analysis approach (DEA) to estimate technical efficiency scores. The DEA is combined with the double bootstrap approach in Simar and Wilson (2007) to study factors that may affect technical efficiency. This method overcomes the traditional two-stage DEA approach frequently used in the efficiency literature. The authors thus research the role of insurance on rice efficiency production using this technique and sizeable field-level survey data from 376 rice farmers distributed in five provinces during the 2019 winter cycle in Ecuador. Findings - Most uninsured rice farmers operate with increasing returns to scale, which means that farms improve their resource use efficiency by increasing their size. However, since scale efficiencies are relatively high, it appears that inefficiencies are explained by inadequate input use. Also, the authors find evidence that insured farmers have a negative relationship with technical efficiency in rice production. In other results, when exploring the influence of additional variables on efficiency, the authors find that parameters related to transplanting, high education, farm size and some locations are positive and statistically significant. Social implications - The results of this work are relevant for policymakers interested in evaluating technology performance, risk management instruments and farm efficiency in an industry in a developing country such as rice production in Ecuador. Originality/value - This paper is the first attempt to estimate farm-level technical efficiency employing the double bootstrap approach to assess the efficiency and its determinants of Ecuadorian rice producers.

Suggested Citation

  • Marcelo Castro & Alvaro Reyes Duarte & Andrés Villegas & Luis Chanci, 2023. "The effect of crop insurance in Ecuadorian rice farming: a technical efficiency approach," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 83(3), pages 478-497, April.
    • Handle: RePEc:eme:afrpps:afr-10-2022-0122
    DOI: 10.1108/AFR-10-2022-0122
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    More about this item

    Keywords

    Rice farming; Insurance; Technical efficiency; Double-bootstrap DEA; Ecuador; Q12; Q18;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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