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Comparative Analysis of Stochastic Frontier Partially non-parametric and Stochastic Frontier Parametric Methods Case Study: Measuring Cost Efficiency in Wheat Production in Iran

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  • Moradi, Ebrahim
  • Pahlavani, Mosayeb
  • Akbari, Ahmad
  • Bashrabadi, Hossain Mehrabi

Abstract

Most research on performance evaluation of agricultural crops in Iran analyzes technical efficiency with estimation of stochastic production function. In this paper in spite of past research we survey cost efficiency with panel data. Information about input prices, yield and production cost per hectare collected for 28 provinces in 10 years and stochastic frontier cost function estimated with panel data in two methods, parametric stochastic frontier and partially non-parametric stochastic frontier. The results show that according to parameter significance and discretion of production structure parametric methodology is more suitable than non- parametric methodology. Land rent (price) had maximum influence and chemical fertilizer price had minimum influence on frontier production cost per hectare. Cost efficiency of wheat production in Iran is suitable and over 90 percent. Surveyed period Khuzestan province had maximum cost efficiency and Yazd province had minimum cost efficiency in wheat production. In whatever province where efficiency is low, agricultural education and knowledge needed to improve further.

Suggested Citation

  • Moradi, Ebrahim & Pahlavani, Mosayeb & Akbari, Ahmad & Bashrabadi, Hossain Mehrabi, 2013. "Comparative Analysis of Stochastic Frontier Partially non-parametric and Stochastic Frontier Parametric Methods Case Study: Measuring Cost Efficiency in Wheat Production in Iran," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 3(2), pages 1-8, June.
    • Handle: RePEc:ags:ijamad:164037
    DOI: 10.22004/ag.econ.164037
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    References listed on IDEAS

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    1. Revoredo-Giha, Cesar & Milne, Catherine E. & Leat, Philip M.K. & Cho, Woong Je, 2009. "Efficiency of Scottish Farms: A Stochastic Cost Frontier Analysis," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 10(2), pages 1-19, July.
    2. 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.
    3. 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.
    4. Fare, Rolf & Knox Lovell, C. A., 1978. "Measuring the technical efficiency of production," Journal of Economic Theory, Elsevier, vol. 19(1), pages 150-162, October.
    5. 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.
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    Cited by:

    1. Kangile, Rajabu Joseph, 2015. "Efficiency In Production By Smallholder Rice Farmers Under Cooperative Irrigation Schemes In Pwani And Morogoro Regions, Tanzania," Research Theses 265681, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Joseph Kangile, Rajabu, 2015. "Efficiency in Production By Smallholder Rice Farmers Under Cooperative Irrigation Schemes in Pwani and Morogoro Regions, Tanzania," Research Theses 243447, Collaborative Masters Program in Agricultural and Applied Economics.

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