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Do peers and agglomeration affect farm efficiency?

Author

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  • Sunhyung Min

    (Center for Agriculture Policy Evaluation, Korea Rural Economic Institute, Naju-si, Republic of Korea)

  • Kwansoo Kim

    (Department of Agricultural Economics and Rural Development, College of Agriculture and Life Sciences, Seoul National University, Seoul, Republic of Korea)

Abstract

This study investigates peer effects and agglomeration impacts on the cost efficiency of South Korean rice farms using a five-year panel dataset of production costs. We employed a time-varying stochastic frontier cost function approach to estimate cost efficiency and a linear-in-means model to quantify peer influences. The findings underscore peer effects as central to understanding and enhancing farm productivity, particularly in rice farming regions. Both specialisation and diversity of agglomeration positively influenced efficiency, with specialisation having a larger impact. Peer effects were stronger in highly rice-specialised areas. These findings indicate the necessity of incorporating peer influences and regional specialisation in agricultural policymaking for productivity enhancement. A nuanced, evidence-based approach leveraging peer dynamics and agglomeration economies is advocated to boost the efficiency of farming practices.

Suggested Citation

  • Sunhyung Min & Kwansoo Kim, 2024. "Do peers and agglomeration affect farm efficiency?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 70(8), pages 395-405.
    • Handle: RePEc:caa:jnlage:v:70:y:2024:i:8:id:99-2024-agricecon
    DOI: 10.17221/99/2024-AGRICECON
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