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Technical Inefficiency and Production Risk in Rice Farming: Evidence from Central Luzon Philippines

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  • Renato Villano
  • Euan Fleming

Abstract

There have been many previous studies of technical inefficiency in rice production in the Philippines, but none has focused simultaneously on production risk and technical inefficiency at the farm level. Rice production is inherently risky because of the heterogeneous production environment. In this study, we analyze technical inefficiency in a rainfed lowland rice environment in Central Luzon using a stochastic frontier production function with a heteroskedastic error structure. An 8-year panel dataset collected from 46 rainfed rice farmers was used to estimate flexible functional specifications. Over the whole period, the average technical efficiency was found to be 79 percent. Results indicate that there is a high degree of variability in technical efficiency estimates, which can be attributed to the instability of farming conditions in the rainfed lowland environment. Mean output was signifificantly influenced by area planted to rice, labor and the amount of fertilizer used. Consequently, these inputs were found to be risk-increasing, whereas herbicide was found to be a risk-reducing input. Copyright 2006 East Asian Economic Association.

Suggested Citation

  • Renato Villano & Euan Fleming, 2006. "Technical Inefficiency and Production Risk in Rice Farming: Evidence from Central Luzon Philippines ," Asian Economic Journal, East Asian Economic Association, vol. 20(1), pages 29-46, March.
  • Handle: RePEc:bla:asiaec:v:20:y:2006:i:1:p:29-46
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    Cited by:

    1. Power, Brendan & Cacho, Oscar J, 2014. "Identifying risk-efficient strategies using stochastic frontier analysis and simulation: An application to irrigated cropping in Australia," Agricultural Systems, Elsevier, vol. 125(C), pages 23-32.
    2. Trujillo, Juan C. & Iglesias, Wilman J., 2013. "Measurement of the Technical Efficiency of Small Pineapple Farmers in Santander, Colombia: a stochastic frontier approach," Brazilian Journal of Rural Economy and Sociology (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 51.
    3. repec:eee:foreco:v:29:y:2017:i:pa:p:38-46 is not listed on IDEAS
    4. Murthy, D. Sreenivasa & Sudha, M. & Hegde, M.R. & Dakshinamoorthy, V., 2009. "Technical Efficiency and its Determinants in Tomato Production in Karnataka, India: Data Envelopment Analysis (DEA) Approach," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 22(2).
    5. Hurley, Terrance M., 2010. "A review of agricultural production risk in the developing world," Working Papers 188476, HarvestChoice.
    6. Thibbotuwawa, Manoj & Mugera, Amin & White, Ben, 2013. "Production Efficiency and Technology Gap in Irrigated and Rain-fed Rice Farming Systems in Sri Lanka: Non Parametric Approach," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152181, Australian Agricultural and Resource Economics Society.
    7. Muhammad Arif Watto & Amin W. Mugera, 2014. "Measuring Production and Irrigation Efficiencies of Rice Farms: Evidence from the Punjab Province, Pakistan," Asian Economic Journal, East Asian Economic Association, vol. 28(3), pages 301-322, September.
    8. Wasantha Athukorala & Muditha Karunarathna, 2017. "Conservation of Genetic Resources of Crops: Farmer Preferences for Banana Diversity in Sri Lanka," Working Papers id:11931, eSocialSciences.
    9. Oppong, B. A. & Onumah, E. E. & Asuming-Brempong, Samuel, 2014. "Stochastic Frontier Modeling of Maize Production in Brong-Ahafo Region of Ghana," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(2), June.
    10. Wasantha Athukorala & Muditha Karunarathna, "undated". "Conservation of Genetic Resources of Crops: Farmer Preferences for Banana Diversity in Sri Lanka," Working papers 114, The South Asian Network for Development and Environmental Economics.
    11. Nchinda, Valentine P. & Villano, Renato A. & Hadley, David & Morales, Emilio L., 2016. "Performance of smallholder minisett seed yam farm enterprises in Cameroon," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(4), December.
    12. Koirala, Krishna H. & Mishra, Ashok K. & Mohanty, Samarendu, 2014. "Determinants of Rice Productivity and Technical Efficiency in the Philippines," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162501, Southern Agricultural Economics Association.
    13. Pardey, Philip G. & James, Jennifer S. & Alston, Julian M. & Wood, Stanley & Koo, Bonwoo & Binenbaum, Eran & Hurley, Terrance M. & Glewwe, Paul & Mayer, Jorge & Jones, Richard & De Groote, Hugo & Kana, 2007. "Science, Technology and Skills," Reports 136256, University of Minnesota, International Science and Technology Practice and Policy.
    14. Zhihai Yang & Amin W. Mugera & Fan Zhang, 2016. "Investigating Yield Variability and Inefficiency in Rice Production: A Case Study in Central China," Sustainability, MDPI, Open Access Journal, vol. 8(8), pages 1-11, August.
    15. Jaime, Mónica M. & Salazar, César A., 2009. "Capital social y eficiencia técnica de los pequeños agricultores de trigo de la Región del Bío Bío
      [Social Capital and technical efficiency of wheat small farmers in the Bío Bío Region (Chile)]
      ," MPRA Paper 17220, University Library of Munich, Germany.
    16. Koirala, Krishna H. & Mishra, Ashok K. & Mohanty, Samarendu, 2014. "Impact of Land Ownership on Productivity and Efficiency of Rice Farmers: A Simulated Maximum Likelihood Approach," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170608, Agricultural and Applied Economics Association.
    17. Ali D. Cagdas & Scott R. Jeffrey & Elwin G. Smith & Peter C. Boxall, 2016. "Environmental Stewardship and Technical Efficiency in Canadian Prairie Canola Production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 455-477, September.
    18. Thibbotuwawa, Manoj & Mugera, Amin W. & White, Benedict, 2012. "A Non-Parametric Analysis of Rice Production Efficiency in Sri Lanka," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124423, Australian Agricultural and Resource Economics Society.
    19. Rao, Xudong, 2014. "Land Fragmentation with Double Bonuses -- The Case of Tanzanian Agriculture," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169436, Agricultural and Applied Economics Association.

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