IDEAS home Printed from https://ideas.repec.org/p/not/notcre/17-04.html
   My bibliography  Save this paper

Crop Diversification and Technical Efficiency in Afghanistan: Stochastic Frontier Analysis

Author

Listed:
  • Hayatullah Ahmadzai

Abstract

Using Stochastic Frontier Analysis (SFA), this paper centered on analysing the impact of Crop Diversification (CD) on farm level technical efficiency in Afghanistan. Data from a household level survey conducted in 2013-2004 by the Central Statistic Organization (CSO) is used in the analysis. The results revealed that adoption of a diversified portfolio of crops by the farmers significantly improves technical efficiency. In addition, access to extension services, farm size, cattle, oxen and tractor ownership by the farm households, and regional variables were other important factors that significantly affect technical efficiency. It is evident from the results that the estimated technical efficiency indices from the preferred truncated normal distribution range from 1.5% to 99.29%, with a sample mean of 71.9%. The basic SFA model was investigated for potential endogeneity in crop diversification. Instrumental Variable (IV) method was employed to correct for endogeneity in crop diversification. The results of the IV estimation reveal that failing to account for endogeneity in the basic model leads to a downward bias which is consistent with attenuation bias (measurement error in CD implies that OLS coefficients are biased towards zero, so one would predict IV coefficients greater in absolute size). The results of crop diversification index showed the presence of a relatively low level of crop diversification. Maximum likelihood estimation of translog stochastic frontier model shows that land, labour, and other purchased inputs (fertilizer, seeds, pesticides usage) have positive impact on farm revenues. The results show an evidence of constant returns to scale.

Suggested Citation

  • Hayatullah Ahmadzai, 2017. "Crop Diversification and Technical Efficiency in Afghanistan: Stochastic Frontier Analysis," Discussion Papers 2017-04, University of Nottingham, CREDIT.
  • Handle: RePEc:not:notcre:17/04
    as

    Download full text from publisher

    File URL: https://www.nottingham.ac.uk/credit/documents/papers/2017/17-04.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Greene, William H., 1980. "Maximum likelihood estimation of econometric frontier functions," Journal of Econometrics, Elsevier, vol. 13(1), pages 27-56, May.
    2. Coelli, Tim J., 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 39(3), pages 1-27, December.
    3. Helfand, Steven M. & Levine, Edward S., 2004. "Farm size and the determinants of productive efficiency in the Brazilian Center-West," Agricultural Economics, Blackwell, vol. 31(2-3), pages 241-249, December.
    4. Guvele, C. A., 2001. "Gains from crop diversification in the Sudan Gezira scheme," Agricultural Systems, Elsevier, vol. 70(1), pages 319-333, October.
    5. Jin Yang & Hui Wang & Songqing Jin & Kevin Chen & Jeffrey Riedinger & Chao Peng, 2016. "Migration, local off-farm employment, and agricultural production efficiency: evidence from China," Journal of Productivity Analysis, Springer, vol. 45(3), pages 247-259, June.
    6. Coelli, Tim & Fleming, Euan, 2004. "Diversification economies and specialisation efficiencies in a mixed food and coffee smallholder farming system in Papua New Guinea," Agricultural Economics, Blackwell, vol. 31(2-3), pages 229-239, December.
    7. Ashwini Chhatre & Sripad Devalkar & Sridhar Seshadri, 2016. "Crop diversification and risk management in Indian agriculture," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 43(2), pages 167-179, June.
    8. Bozoglu, Mehmet & Ceyhan, Vedat, 2007. "Measuring the technical efficiency and exploring the inefficiency determinants of vegetable farms in Samsun province, Turkey," Agricultural Systems, Elsevier, vol. 94(3), pages 649-656, June.
    9. Nguyen, Huy, 2014. "Crop diversification, economic performance and household’s behaviours Evidence from Vietnam," MPRA Paper 59090, University Library of Munich, Germany.
    10. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    11. Rahman, Sanzidur, 2009. "Whether crop diversification is a desired strategy for agricultural growth in Bangladesh?," Food Policy, Elsevier, vol. 34(4), pages 340-349, August.
    12. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    13. Llewelyn, Richard V. & Williams, Jeffery R., 1996. "Nonparametric analysis of technical, pure technical, and scale efficiencies for food crop production in East Java, Indonesia," Agricultural Economics, Blackwell, vol. 15(2), pages 113-126, November.
    14. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    15. Kolawole Ogundari, 2013. "Crop diversification and technical efficiency in food crop production: A study of peasant farmers in Nigeria," International Journal of Social Economics, Emerald Group Publishing, vol. 40(3), pages 267-287, February.
    16. Mustafa U. Karakaplan, 2017. "Fitting endogenous stochastic frontier models in Stata," Stata Journal, StataCorp LP, vol. 17(1), pages 39-55, March.
    17. Viveka P. Kudaligama & John F. Yanagida, 2000. "A Comparison of Intercountry Agricultural Production Functions: A Frontier Function Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 25(1), pages 57-74, June.
    18. Weiss, Christoph R. & Thiele, Holger D., 2002. "Diversifikation und Wachstum landwirtschaftlicher Unternehmen," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 51(03), pages 1-8.
    19. George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
    20. repec:ebl:ecbull:eb-16-00551 is not listed on IDEAS
    21. Kumbhakar,Subal C. & Wang,Hung-Jen & Horncastle,Alan P., 2015. "A Practitioner's Guide to Stochastic Frontier Analysis Using Stata," Cambridge Books, Cambridge University Press, number 9781107029514, December.
    22. Linxiu Zhang & Weiliang Su & Tor Eriksson & Chengfang Liu, 2016. "How Off-farm Employment Affects Technical Efficiency of China's Farms: The Case of Jiangsu," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 24(3), pages 37-51, May.
    23. Suzanne O’Neill & Alan Matthews, 2001. "Technical Change and Efficiency in Irish Agriculture," The Economic and Social Review, Economic and Social Studies, vol. 32(3), pages 263-284.
    24. Narala, Anuradha & Zala, Y.C., 2010. "Technical Efficiency of Rice Farms under Irrigated Conditions in Central Gujarat," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 23(2), July.
    25. Timothy J. Gronberg & Dennis W. Jansen & Mustafa U. Karakaplan & Lori L. Taylor, 2015. "School district consolidation: Market concentration and the scale-efficiency tradeoff," Southern Economic Journal, Southern Economic Association, vol. 82(2), pages 580-597, October.
    26. Lin, Tsai-Fen & Schmidt, Peter, 1984. "A Test of the Tobit Specification against an Alternative Suggested by Cragg," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 174-177, February.
    27. Lakner, Sebastian & Kirchweger, Stefan & Hoop, Daniel & Brümmer, Bernhard & Kantelhardt, Jochen, 2015. "Impact of diversification on technical efficiency of organic farming in Switzerland, Austria and Southern Germany," DARE Discussion Papers 1508, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    28. Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 1-11, December.
    29. Barry K. Goodwin & Ashok K. Mishra, 2004. "Farming Efficiency and the Determinants of Multiple Job Holding by Farm Operators," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 722-729.
    30. Abdul Wadud & Ben White, 2000. "Farm household efficiency in Bangladesh: a comparison of stochastic frontier and DEA methods," Applied Economics, Taylor & Francis Journals, vol. 32(13), pages 1665-1673.
    31. Lee, Lung-Fei, 1983. "A test for distributional assumptions for the stochastic frontier functions," Journal of Econometrics, Elsevier, vol. 22(3), pages 245-267, August.
    32. Chandra Bahadur Adhikari & Trond Bjorndal, 2012. "Analyses of technical efficiency using SDF and DEA models: evidence from Nepalese agriculture," Applied Economics, Taylor & Francis Journals, vol. 44(25), pages 3297-3308, September.
    33. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    34. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    35. Van den Berg, M. Marrit & Hengsdijk, Huib & Wolf, Joost & Van Ittersum, Martin K. & Guanghuo, Wang & Roetter, Reimund P., 2007. "The impact of increasing farm size and mechanization on rural income and rice production in Zhejiang province, China," Agricultural Systems, Elsevier, vol. 94(3), pages 841-850, June.
    36. Jema Haji, 2007. "Production Efficiency of Smallholders' Vegetable-dominated Mixed Farming System in Eastern Ethiopia: A Non-Parametric Approach," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(1), pages 1-27, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hayatullah Ahmadzai, 2018. "Factor market participation and tests for separability in Afghanistan," Discussion Papers 2018-10, University of Nottingham, CREDIT.

    More about this item

    Keywords

    Agricultural economics; Afghanistan; applied econometrics; technical efficiency; crop diversification;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:not:notcre:17/04. 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: (Hilary Hughes). General contact details of provider: http://edirc.repec.org/data/cenotuk.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.