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Heterogeneous Farm Output and Technical Efficiency Estimates

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  • Mamardashvili, Phatima
  • Bokusheva, Raushan
  • Schmid, Dierk

Abstract

Farmers in most OECD countries are engaged in different activities which go beyond agriculture. When assessing farm performance, it is appropriate to model these heterogeneous farm outputs separately. In this study, we use the distance function approach, which allows the consideration of technology with multiple outputs and multiple inputs. We compare estimates from single-output technology with estimates from multiple-output technology. Our empirical analysis is based on an unbalanced panel of dairy farms in the plain region of Switzerland for the period from 2003 to 2009. We choose the parametric estimation method and employ a translog specification of the production technology. The test of output separability favours a model that separately considers three different outputs: agricultural output; para-agricultural output; and direct payments. The separate modelling of direct payments has considerable influence on the estimated technology parameters as well as the technical efficiency scores. The consideration of direct payments as a separate output increases the elasticity of land by a factor greater than two and, accordingly, reduces the distance function elasticities of other inputs. The average technical efficiency estimates do not differ substantially when specifications differ. However, we reveal serious differences in the estimates of technical efficiency for individual farms. The estimated rank correlation coefficients show that the ranking of farms in terms of technical efficiency differs considerably when direct payments are modelled as a separate output. Landwirtschaftliche Betriebe der meisten OECDLänder sind in Aktivitäten involviert, welche über die reine landwirtschaftliche Produktion hinausgehen. Bei der Leistungseinschätzung der Betriebe ist es angebracht, diese heterogenen Outputs separat zu modellieren. In dieser Studie nutzen wir einen Distanzfunktion- Ansatz, welcher die Berücksichtigung von Technologie mit mehreren Outputs und mehreren Inputs ermöglicht. Wir vergleichen die Schätzungen von der Technologie mit einem Output mit den Schätzungen von der Technologie mit mehreren Outputs. Unsere empirische Analyse basiert auf einem unbalansierten Panel-Datensatz, welcher Schweizer Milchbetriebe der Talregion von 2003 bis 2009 umfasst. Wir wählen eine parametrische Schätzungsmethode und verwenden eine Translogfunktion für die Spezifizierung der Produktionstechnologie. Der Test für die Separierbarkeit der Outputs bevorzugt das Modell mit separater Betrachtung drei verschiedener Outputs : landwirtschaftlicher Output, para-landwirtschaftlicher Output und Direktzahlungen. Die separate Modellierung der Direktzahlungen hat einen erheblichen Einfluss auf die geschätzten technologischen Parameter sowie auf die technischen Effizienzwerte. Die Berücksichtigung der Direktzahlungen als separater Output erhöht die Elastizität des Inputs „Land“ um mehr als das Zweifache, während die Produktivität der anderen Inputs verringert wird. Die Schätzungen der durchschnittlichen technischen Effizienz unterscheiden sich nur geringfügig zwischen den Spezifikationen. Jedoch zeigen sich beträchtliche Unterschiede in den Schätzungen der technischen Effizienz einzelner Betriebe. Die Schätzungen der Rangkorrelationskoeffizienten zeigen, dass die separate Berücksichtigung der Direktzahlungen zu grossen Unterschieden in der technischen Effizienz der Betriebe führt.

Suggested Citation

  • Mamardashvili, Phatima & Bokusheva, Raushan & Schmid, Dierk, 2014. "Heterogeneous Farm Output and Technical Efficiency Estimates," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 63(01), pages 1-15, March.
  • Handle: RePEc:ags:gjagec:253147
    DOI: 10.22004/ag.econ.253147
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    References listed on IDEAS

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    1. Lakner, Sebastian & Kirchweger, Stefan & Hoop, Daniel & Brümmer, Bernhard & Kantelhardt, Jochen, 2015. "Impact of diversification on technical efficiency of organic farming in Switzerland, Austria and Southern Germany," DARE Discussion Papers 1508, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    2. Lakner, Sebastian & Kirchweger, Stefan & Hoop, Daniel & Brümmer, Bernhard & Kantelhardt, Jochen, 2014. "Technical Efficiency of Organic Farming in the Alpine Region – the Impact of Farm Structures and Policies," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182763, European Association of Agricultural Economists.
    3. Sebastian Lakner & Stefan Kirchweger & Daniel Hoop & Bernhard Brümmer & Jochen Kantelhardt, 2018. "The Effects of Diversification Activities on the Technical Efficiency of Organic Farms in Switzerland, Austria, and Southern Germany," Sustainability, MDPI, Open Access Journal, vol. 10(4), pages 1-18, April.

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