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Efficiency of Scottish Farms: A Stochastic Cost Frontier Analysis

Author

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  • Revoredo-Giha, Cesar
  • Milne, Catherine E.
  • Leat, Philip M.K.
  • Cho, Woong Je

Abstract

In this paper the relative cost efficiency of Scottish farms is determined, and variables that explain this efficiency by farm type are identified and implications discussed. A panel dataset from the Farm Accounts Scheme (FAS) survey for the period 1997-2004 was used for the estimation. A cost efficiency indicator was measured using a fixed effect panel data regression. Further analysis, to explain the efficiency results, indicated the presence of important farm size and regional effects. However, other variables, whilst statistically significant, did not produce a consistent effect across the different farm types.

Suggested Citation

  • Revoredo-Giha, Cesar & Milne, Catherine E. & Leat, Philip M.K. & Cho, Woong Je, 2009. "Efficiency of Scottish Farms: A Stochastic Cost Frontier Analysis," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 10(2), June.
  • Handle: RePEc:ags:aergaa:56633
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    File URL: http://purl.umn.edu/56633
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    References listed on IDEAS

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    1. Paul Wilson & Dave Hadley & Stephen Ramsden & Ioannis Kaltsas, 1998. "Measuring and Explaining Technical Efficiency in UK Potato Production," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 294-305.
    2. Santarossa, John M., 2003. "Technical And Financial Sustainability In Scottish Agriculture," Miscellaneous Papers 11829, Agecon Search.
    3. Wilson, Paul & Hadley, David & Asby, Carol, 2001. "The influence of management characteristics on the technical efficiency of wheat farmers in eastern England," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 24(3), March.
    4. Caves, Douglas W & Christensen, Laurits R & Tretheway, Michael W, 1980. "Flexible Cost Functions for Multiproduct Firms," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 477-481, August.
    5. Andrew Barnes, 2008. "Technical Efficiency Estimates of Scottish Agriculture: A Note," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(2), pages 370-376, June.
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    Citations

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    Cited by:

    1. repec:ags:ijamad:151891 is not listed on IDEAS
    2. Moradi, Ebrahim & Pahlavani, Mosayeb & Akbari, Ahmad & Bashrabadi, Hossain Mehrabi, 2013. "Comparative Analysis of Stochastic Frontier Partially non-parametric and Stochastic Frontier Parametric Methods Case Study: Measuring Cost Efficiency in Wheat Production in Iran," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 3(2), June.
    3. Aysun, Uluc & Bouvet, Florence & Hofler, Richard, 2014. "An alternative measure of structural unemployment," Economic Modelling, Elsevier, vol. 38(C), pages 592-603.
    4. Ferrara, Giancarlo & Vidoli, Francesco, 2017. "Semiparametric stochastic frontier models: A generalized additive model approach," European Journal of Operational Research, Elsevier, vol. 258(2), pages 761-777.
    5. Jiang, Nan & Sharp, Basil, 2014. "Cost Efficiency of Dairy Farming in New Zealand: A Stochastic Frontier Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(3), December.
    6. Jiang, Nan & Sharp, Basil, 0. "Cost Efficiency of Dairy Farming in New Zealand: A Stochastic Frontier Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association.
    7. Cuéllar-Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "Natural and cyclical unemployment: a stochastic frontier decomposition and economic policy implications," MPRA Paper 76503, University Library of Munich, Germany.
    8. Cuéllar Martín, Jaime & Martín-Román, Ángel L. & Moral, Alfonso, 2017. "A composed error model decomposition and spatial analysis of local unemployment," MPRA Paper 79783, University Library of Munich, Germany.
    9. Jiang, Nan & Sharp, Basil, 2013. "Cost Efficiency of Dairy Farming in New Zealand: a stochastic frontier analysis," 2013 Conference, August 28-30, 2013, Christchurch, New Zealand 160266, New Zealand Agricultural and Resource Economics Society.
    10. Joseph Kangile, Rajabu, 2015. "Efficiency in Production By Smallholder Rice Farmers Under Cooperative Irrigation Schemes in Pwani and Morogoro Regions, Tanzania," Research Theses 243447, Collaborative Masters Program in Agricultural and Applied Economics.

    More about this item

    Keywords

    Stochastic cost frontier analysis; cost efficiency; Scottish farms; Common Agricultural Policy; Farm Management; Q12;

    JEL classification:

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

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