Productive Efficiency in Agriculture: Corn Production in Mexico

Using a stochastic production frontier model and data for 2002 from a representative sample of Mexican rural households, in this paper we first study empirically whether or not small and medium farmers produce corn efficiently. The results show that corn production is inefficient, nation-wide and for both commercial and subsistence farmers. Our findings also show that this is even more so for subsistence producers and for the Center and the South-southeast regions of rural Mexico. In addition, we find that subsistence farmers use less prod uctive inputs (seeds and agrochemicals) with respect to commercial farmers. Based on these results, we then apply a regression model to inquire about the factors explaining inefficiency. We get that farmers facing natural disasters, that produce corn for subsistence using diverse seed varieties of the grain in plots with less than 1 hectare and indigenous, are more inefficient than other farmers. The results also indicate that households located in communities with marketing facilities and that have benefited from infrastructural investments, produce corn in a less inefficient manner. The detailed nature of the data used allows us to have results that differentiate rural regions as well as commercial and subsistence corn producers, and hence, to suggest focalized policies for rural development.