IDEAS home Printed from https://ideas.repec.org/a/bla/asiaec/v20y2006i1p29-46.html
   My bibliography  Save this article

Technical Inefficiency and Production Risk in Rice Farming: Evidence from Central Luzon Philippines

Author

Listed:
  • Renato Villano
  • Euan Fleming

Abstract

There have been many previous studies of technical inefficiency in rice production in the Philippines, but none has focused simultaneously on production risk and technical inefficiency at the farm level. Rice production is inherently risky because of the heterogeneous production environment. In this study, we analyze technical inefficiency in a rainfed lowland rice environment in Central Luzon using a stochastic frontier production function with a heteroskedastic error structure. An 8‐year panel dataset collected from 46 rainfed rice farmers was used to estimate flexible functional specifications. Over the whole period, the average technical efficiency was found to be 79 percent. Results indicate that there is a high degree of variability in technical efficiency estimates, which can be attributed to the instability of farming conditions in the rainfed lowland environment. Mean output was signifificantly influenced by area planted to rice, labor and the amount of fertilizer used. Consequently, these inputs were found to be risk‐increasing, whereas herbicide was found to be a risk‐reducing input.

Suggested Citation

  • Renato Villano & Euan Fleming, 2006. "Technical Inefficiency and Production Risk in Rice Farming: Evidence from Central Luzon Philippines," Asian Economic Journal, East Asian Economic Association, vol. 20(1), pages 29-46, March.
    • Handle: RePEc:bla:asiaec:v:20:y:2006:i:1:p:29-46
    DOI: 10.1111/j.1467-8381.2006.00223.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-8381.2006.00223.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-8381.2006.00223.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
    2. Xu, Xiaosong & Jeffrey, Scott R., 1998. "Efficiency and technical progress in traditional and modern agriculture: evidence from rice production in China," Agricultural Economics, Blackwell, vol. 18(2), pages 157-165, March.
    3. Bravo-Ureta, Boris E. & Pinheiro, António E., 1993. "Efficiency Analysis of Developing Country Agriculture: A Review of the Frontier Function Literature," Agricultural and Resource Economics Review, Cambridge University Press, vol. 22(1), pages 88-101, April.
    4. Kumbhakar, Sabul C., 1993. "Production risk, technical efficiency, and panel data," Economics Letters, Elsevier, vol. 41(1), pages 11-16.
    5. G. Battese & A. Rambaldi & G. Wan, 1997. "A Stochastic Frontier Production Function with Flexible Risk Properties," Journal of Productivity Analysis, Springer, vol. 8(3), pages 269-280, August.
    6. Ahmad, Munir & Rafiq, Muhammad & Ali, Asgar, 1999. "An Analysis Of Technical Efficiency Of Rice Farmers In Pakistani Punjab," Bangladesh Journal of Agricultural Economics, Bangladesh Agricultural University, vol. 22(2), pages 1-08, December.
    7. Tim Coelli & Sanzidur Rahman & Colin Thirtle, 2002. "Technical, Allocative, Cost and Scale Efficiencies in Bangladesh Rice Cultivation: A Non‐parametric Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 607-626, November.
    8. Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
    9. Ray Trewin & L. Weiguo & Sjaiful Erwidodo & Sjaiful Bahri, 1995. "Analysis Of The Technical Efficiency Over Time Of West Javanese Rice Farms," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 39(2), pages 143-163, August.
    10. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-1248, September.
    11. Larson, Donald F. & Plessmann, Frank, 2002. "Do farmers chooseto be inefficient? evidence from Bicol, Philippines," Policy Research Working Paper Series 2787, The World Bank.
    12. Mythili, G. & Shanmugam, K.R., 2000. "Technical Efficiency of Rice Growers in Tamil Nadu: A Study Based on Panel Data," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 55(1), March.
    13. 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.
    14. Mubarik Ali & John C. Flinn, 1989. "Profit Efficiency Among Basmati Rice Producers in Pakistan Punjab," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 303-310.
    15. K. Kalirajan, 1981. "An Econometric Analysis of Yield Variability in Paddy Production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 29(3), pages 283-294, November.
    16. Battese, George E., 1992. "Frontier production functions and technical efficiency: a survey of empirical applications in agricultural economics," Agricultural Economics, Blackwell, vol. 7(3-4), pages 185-208, October.
    17. Weiming Tian & Guang Wan, 2000. "Technical Efficiency and Its Determinants in China's Grain Production," Journal of Productivity Analysis, Springer, vol. 13(2), pages 159-174, March.
    18. Larson, Donald F. & Plessmann, Frank, 2009. "Do farmers choose to be inefficient? Evidence from Bicol," Journal of Development Economics, Elsevier, vol. 90(1), pages 24-32, September.
    19. 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.
    20. Xiaosong Xu & Scott R. Jeffrey, 1998. "Efficiency and technical progress in traditional and modern agriculture: evidence from rice production in China," Agricultural Economics, International Association of Agricultural Economists, vol. 18(2), pages 157-165, March.
    21. 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.
    22. 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.
    23. Chieko Umetsu & Thamana Lekprichakul & Ujjayant Chakravorty, 2003. "Efficiency and Technical Change in the Philippine Rice Sector: A Malmquist Total Factor Productivity Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 943-963.
    24. Dev, Uttam Kumar & Hossain, Mahabub, 1995. "Farmers' Education, Modern Technology And Technical Efficiency Of Rice Growers," Bangladesh Journal of Agricultural Economics, Bangladesh Agricultural University, vol. 18(2), pages 1-13, December.
    25. George E. Battese, 1997. "A Note On The Estimation Of Cobb‐Douglas Production Functions When Some Explanatory Variables Have Zero Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 250-252, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Villano, Renato A. & Fleming, Euan M., 2004. "Analysis of Technical Efficiency in a Rainfed Lowland Rice Environment in Central Luzon Philippines Using a Stochastic Frontier Production Function with a Heteroskedastic Error Structure," Working Papers 12906, University of New England, School of Economics.
    2. Tim J. Coelli, 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 39(3), pages 219-245, December.
    3. Antti Saastamoinen, 2015. "Heteroscedasticity Or Production Risk? A Synthetic View," Journal of Economic Surveys, Wiley Blackwell, vol. 29(3), pages 459-478, July.
    4. Abdul Wadud, 2013. "Impact of Microcredit on Agricultural Farm Performance and Food Security in Bangladesh," Working Papers 14, Institute of Microfinance (InM).
    5. Boris Bravo-Ureta & Daniel Solís & Víctor Moreira López & José Maripani & Abdourahmane Thiam & Teodoro Rivas, 2007. "Technical efficiency in farming: a meta-regression analysis," Journal of Productivity Analysis, Springer, vol. 27(1), pages 57-72, February.
    6. Goyal, S.K. & Suhag, K.S. & Pandey, U.K., 2006. "An Estimation of Technical Efficiency of Paddy Farmers in Haryana State of India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 61(1), pages 1-15.
    7. Wasantha Athukorala & Clevo Wilson, 2012. "Groundwater overuse and farm-level technical inefficiency: evidence from Sri Lanka," School of Economics and Finance Discussion Papers and Working Papers Series 279, School of Economics and Finance, Queensland University of Technology.
    8. Madau, Fabio A., 2005. "Technical Efficiency in Organic Farming: An Application on Italian Cereal Farms Using a Parametric Approach," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24545, European Association of Agricultural Economists.
    9. Anik, Asif Reza & Bauer, Siegfried, 2015. "Impact of resource ownership and input market access on Bangladeshi paddy growers’ efficiency," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 4(3), April.
    10. Villano, Renato A. & O'Donnell, Christopher J. & Battese, George E., 2005. "An Investigation of Production Risk, Risk Preferences and Technical Efficiency: Evidence From Rainfed Lowland Rice Farms in the Philippines," Working Papers 12953, University of New England, School of Economics.
    11. Ashok K. Mishra & Saleem Shaik & Aditya R. Khanal & Subir Bairagi, 2018. "Contract farming and technical efficiency: Evidence from low†value and high†value crops in Nepal," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 426-440, March.
    12. Zahidul Islam, K.M. & Sumelius, John & Bäckman, Stefan, 2012. "Do differences in technical efficiency explain the adoption rate of HYV rice? Evidence from Bangladesh," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 13(1), pages 1-18.
    13. García-Suárez, Federico & Pérez-Quesada, Gabriela & Molina, Carlos, 2022. "Rangeland cattle production in Uruguay: Single-output versus multi-output efficiency measures," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 22(01), June.
    14. Álvaro Ramírez Suárez, 2013. "Análisis de eficiencia económica de fincas arroceras: una aplicación de una función determinística de ingresos brutos frontera," Revista Lebret, Universidad Santo Tomás - Bucaramanga, vol. 5, pages 213-240, December.
    15. Reddy, Mahendra, 2002. "Implication of Tenancy Status on Productivity and Efficiency: Evidence from Fiji," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 4, pages 1-20.
    16. Álvaro Ramírez Suárez, 2013. "Análisis de eficiencia económica de fincas arroceras: una aplicación de una función determinística de ingresos brutos frontera," Revista Lebret, Universidad Santo Tomás - Bucaramanga, vol. 5, pages 213-240, December.
    17. Md Abdur Rouf, 2020. "Evaluation of Agricultural Projects by Parametric Cost Efficiency and Productivity-gap Approaches: An Empirical Study of Flood Control and Drainage Systems in the Southwest Coastal Area of Bangladesh," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 22.
    18. repec:ags:bdbjaf:258303 is not listed on IDEAS
    19. Rouf, Abdur, 2015. "Conventional vs Natural Flood Control and Drainage Managements in a Tidal Coastal Zone: An Evaluation from a Productive Efficiency Perspective," 89th Annual Conference, April 13-15, 2015, Warwick University, Coventry, UK 256023, Agricultural Economics Society.
    20. Ali M. Oumer & Amin Mugera & Michael Burton & Atakelty Hailu, 2022. "Technical efficiency and firm heterogeneity in stochastic frontier models: application to smallholder maize farms in Ethiopia," Journal of Productivity Analysis, Springer, vol. 57(2), pages 213-241, April.
    21. Alwin Keil & Alwin D’souza & Andrew McDonald, 2015. "Zero-tillage as a pathway for sustainable wheat intensification in the Eastern Indo-Gangetic Plains: does it work in farmers’ fields?," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 7(5), pages 983-1001, October.

    More about this item

    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:bla:asiaec:v:20:y:2006:i:1:p:29-46. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/eaeaaea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.