Technology heterogeneity and sustainability efficiency: Empirical evidence from Peruvian coffee production

This article uses a non-parametric non-convex metafrontier approach to estimate farm sustainability efficiency while considering heterogeneity in production technologies stemming from differences in the production environment under which farming takes place. Sustainability efficiency measures reflect farmers’ ability to increase production of desirable agricultural outputs, reduce fertilizer-induced nitrous oxide emissions, and create employment opportunities for women. This is the first attempt to measure efficiency in terms of firms’ contribution to employment opportunities for women, a social and developmental issue gaining much public attention. The empirical application uses data on 1109 Peruvian coffee farms over the period 2017–2019. Sample farms operate in two natural regions of Peru – namely Sierra, and Selva – where farming systems differ because of variations in resource endowments and socioeconomic conditions. Results indicate the presence of interregional heterogeneity in production technologies of sample farms. Sierra coffee farms outperformed coffee farms located in the Selva region in all three dimensions of sustainability efficiency, suggesting that it is the latter that are in greater need of efficiency improvement interventions. Results further show that both Sierra and Selva coffee farms performed worst with respect to environmental efficiency, implying a greater scope for reducing nitrous oxide emissions with existing production technology and resources.