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Impact of Direct Income Payments on Productive Efficiency of Korean Rice Farms

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  • Kang, Hye-Jung
  • Kim, Jeong-Ho

Abstract

This paper examines the impact of direct income payments on productive efficiency of Korean rice farms, using farm-level cross sectional data in 2006. For representation of efficiency and its determinants, this paper uses a model that estimates the deviations of farms from a translog distance function and the determinants of these deviations. This paper especially estimates a stochastic frontier production function to explain deviations from best-practice productivity with a two-part error term including statistical noise from measurement error and technical inefficiency arising from farms not reaching the production frontier boundary. The empirical evidence finds that farms that get a higher share of direct payments in farm revenue are less efficient than others. This inefficiency is reduced by increases in farm size. Another result indicates that farms received greater direct payments on aggregate are more efficient than other farms since fixed payment, one part of rice direct payment, is tied to the amount of a farm's cropland that has been enrolled in programs, as well as yield histories.

Suggested Citation

  • Kang, Hye-Jung & Kim, Jeong-Ho, 2008. "Impact of Direct Income Payments on Productive Efficiency of Korean Rice Farms," Journal of Rural Development/Nongchon-Gyeongje, Korea Rural Economic Institute, vol. 31(2), May.
  • Handle: RePEc:ags:jordng:45650
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    File URL: http://purl.umn.edu/45650
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    References listed on IDEAS

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    1. Catherine J. Morrison Paul & Warren E. Johnston & Gerald A. G. Frengley, 2000. "Efficiency in New Zealand Sheep and Beef Farming: The Impacts of Regulatory Reform," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 325-337, May.
    2. Coelli, Tim J. & Battese, George E., 1996. "Identification Of Factors Which Influence The Technical Inefficiency Of Indian Farmers," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(02), August.
    3. Chau, Nancy H. & de Gorter, Harry, 2000. "Disentangling The Production And Export Consequences Of Direct Farm Income Payments," 2000 Annual meeting, July 30-August 2, Tampa, FL 21854, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
    5. Bernhard Brümmer & Thomas Glauben & Geert Thijssen, 2002. "Decomposition of Productivity Growth Using Distance Functions: The Case of Dairy Farms in Three European Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 628-644.
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    Cited by:

    1. Hoang, Viet-Ngu & Nguyen, Trung Thanh, 2013. "Analysis of environmental efficiency variations: A nutrient balance approach," Ecological Economics, Elsevier, vol. 86(C), pages 37-46.

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