IDEAS home Printed from https://ideas.repec.org/p/ags/gewi07/7573.html
   My bibliography  Save this paper

Farming In The Eastern Amazon-Poor But Allocatively Efficient

Author

Listed:
  • Sauer, Johannes
  • Mendoza-Escalante, Arisbe

Abstract

This research empirically investigates the well known 'poor-but-efficient' hypothesis formulated by Schultz (1964) assuming that small scale farmers in developing countries are reasonably efficient in allocating their scarce resources by responding positively to price incentives. Deviating from Schultz it is assumed here that scale effects explain a considerable proportion of small scale farmers' relative efficiency. The theoretical underpinnings of the scale efficiency concept are briefly reviewed before a normalized generalized Leontief profit function is modeled by using its output supply and input demand system to capture the joint production of cassava flour and maize by a sample of small scale farmers in the Bragantina region of the Eastern Amazon, Brazil. The discussion on theoretical consistency and functional flexibility is considered by imposing convexity on the GL profit framework. The empirical results confirm our revised hypothesis that small farmers in traditional development settings are 'poor-but-allocatively efficient' by clearly suggesting considerable inefficiency with respect to the scale of operations.

Suggested Citation

  • Sauer, Johannes & Mendoza-Escalante, Arisbe, 2007. "Farming In The Eastern Amazon-Poor But Allocatively Efficient," 47th Annual Conference, Weihenstephan, Germany, September 26-28, 2007 7573, German Association of Agricultural Economists (GEWISOLA).
  • Handle: RePEc:ags:gewi07:7573
    as

    Download full text from publisher

    File URL: http://ageconsearch.umn.edu/record/7573/files/cp07sa01.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Wang, Jirong & Cramer, Gail L. & Wailes, Eric J., 1996. "Production efficiency of Chinese agriculture: evidence from rural household survey data," Agricultural Economics, Blackwell, vol. 15(1), pages 17-28, September.
    2. Taylor, Timothy G. & Scott Shonkwiler, J., 1986. "Alternative stochastic specifications of the frontier production function in the analysis of agricultural credit programs and technical efficiency," Journal of Development Economics, Elsevier, vol. 21(1), pages 149-160, April.
    3. Lovell, C A Knox & Sickles, Robin C, 1983. "Testing Efficiency Hypotheses in Joint Production: A Parametric Approach," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 51-58, February.
    4. Bravo-Ureta, Boris E. & Evenson, Robert E., 1994. "Efficiency in agricultural production: The case of peasant farmers in eastern Paraguay," Agricultural Economics, Blackwell, vol. 10(1), pages 27-37, January.
    5. Sherlund, Shane M. & Barrett, Christopher B. & Adesina, Akinwumi A., 2002. "Smallholder technical efficiency controlling for environmental production conditions," Journal of Development Economics, Elsevier, vol. 69(1), pages 85-101, October.
    6. Diewert, W. E., 1973. "Functional forms for profit and transformation functions," Journal of Economic Theory, Elsevier, vol. 6(3), pages 284-316, June.
    7. W. David Hopper, 1965. "Allocation Efficiency in a Traditional Indian Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 47(3), pages 611-624.
    8. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-846, September.
    9. Ryan, David L. & Wales, Terence J., 2000. "Imposing local concavity in the translog and generalized Leontief cost functions," Economics Letters, Elsevier, vol. 67(3), pages 253-260, June.
    10. Lau, Lawrence J & Yotopoulos, Pan A, 1971. "A Test for Relative Efficiency and Application to Indian Agriculture," American Economic Review, American Economic Association, vol. 61(1), pages 94-109, March.
    11. Bhagwati, Jagdish N & Chakravarty, Sukhamoy, 1969. "Contributions to Indian Economic Analysis: A Survey," American Economic Review, American Economic Association, vol. 59(4), pages 2-73, Part II S.
    12. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
    13. Oberhofer, W & Kmenta, J, 1974. "A General Procedure for Obtaining Maximum Likelihood Estimates in Generalized Regression Models," Econometrica, Econometric Society, vol. 42(3), pages 579-590, May.
    14. Banerjee, Abhijit V & Newman, Andrew F, 1994. "Poverty, Incentives, and Development," American Economic Review, American Economic Association, vol. 84(2), pages 211-215, May.
    15. Ball, Richard & Pounder, Laurie, 1996. ""Efficient but Poor" Revisited," Economic Development and Cultural Change, University of Chicago Press, vol. 44(4), pages 735-760, July.
    16. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    17. Christpher B. Barrett, 1997. "How credible are estimates of peasant allocative scale, or scope efficiency? A commentary," Journal of International Development, John Wiley & Sons, Ltd., vol. 9(2), pages 221-229.
    18. Johannes Sauer, 2006. "Economic Theory and Econometric Practice: Parametric Efficiency Analysis," Empirical Economics, Springer, vol. 31(4), pages 1061-1087, November.
    19. Bravo-Ureta, Boris E. & Evenson, Robert E., 1994. "Efficiency in agricultural production: The case of peasant farmers in eastern Paraguay," Agricultural Economics, Blackwell, vol. 10(1), pages 27-37, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Farm Management;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:gewi07:7573. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/gewisea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.