IDEAS home Printed from https://ideas.repec.org/a/bla/jageco/v73y2022i1p195-219.html
   My bibliography  Save this article

Precision agriculture technology adoption and technical efficiency

Author

Listed:
  • Nathan D. DeLay
  • Nathanael M. Thompson
  • James R. Mintert

Abstract

We explore the relationship between precision agriculture (PA) technology adoption and technical efficiency using the 2016 USDA Agricultural Resource Management Survey (ARMS). Efficiency gains from PA are likely cumulative, that is, the true impact of precision farming depends on the integration of complementary tools. To examine the efficiency benefits of different PA bundles, we perform a two‐step analysis. First, we use cluster analysis to identify distinct producer groups based on patterns in PA technology adoption. These producer groups map naturally onto the classic technology adoption curve (laggards, late majority, early majority, innovators). Second, we use stochastic frontier analysis (SFA) and stochastic meta‐frontier analysis (SMFA) to estimate differences in technical efficiency between PA adoption groups. We find that farms with advanced PA technology bundles are significantly more technically efficient than non‐adopters. Differences in technical efficiency are not found to be driven by heterogeneous production technologies, but rather inefficiencies in input usage at the farm level. Our results have strong implications for farm consolidation in US agriculture.

Suggested Citation

  • Nathan D. DeLay & Nathanael M. Thompson & James R. Mintert, 2022. "Precision agriculture technology adoption and technical efficiency," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 195-219, February.
    • Handle: RePEc:bla:jageco:v:73:y:2022:i:1:p:195-219
    DOI: 10.1111/1477-9552.12440
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1477-9552.12440
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1477-9552.12440?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
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Subal C. Kumbhakar & Christopher F. Parmeter & Valentin Zelenyuk, 2022. "Stochastic Frontier Analysis: Foundations and Advances I," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 8, pages 331-370, Springer.
    2. Chen, Zhuo & Huffman, Wallace E. & Rozelle, Scott, 2009. "Farm technology and technical efficiency: Evidence from four regions in China," China Economic Review, Elsevier, vol. 20(2), pages 153-161, June.
    3. Stefanou, Spiro E. & Silva, Elvira, 2007. "AJAE Appendix: Dynamic Efficiency Measurement: Theory and Application," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(2), pages 1-19, May.
    4. Thompson, Nathanael M. & Bir, Courtney & Widmar, David A. & Mintert, James R., 2019. "Farmer Perceptions Of Precision Agriculture Technology Benefits," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 51(1), pages 142-163, February.
    5. 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.
    6. Caudill, Steven B. & Ford, Jon M., 1993. "Biases in frontier estimation due to heteroscedasticity," Economics Letters, Elsevier, vol. 41(1), pages 17-20.
    7. Shockley, Jordan M. & Dillon, Carl R. & Stombaugh, Timothy S., 2011. "A Whole Farm Analysis of the Influence of Auto-Steer Navigation on Net Returns, Risk, and Production Practices," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 43(1), pages 1-19, February.
    8. George Battese & D. Rao & Christopher O'Donnell, 2004. "A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies," Journal of Productivity Analysis, Springer, vol. 21(1), pages 91-103, January.
    9. Jean-Paul Chavas & Rulon D. Pope, 1984. "Information: Its Measurement and Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(5), pages 705-710.
    10. K. Hadri & C. Guermat & J. Whittaker, 2003. "Estimation of technical inefficiency effects using panel data and doubly heteroscedastic stochastic production frontiers," Empirical Economics, Springer, vol. 28(1), pages 203-222, January.
    11. MacDonald, James M. & Hoppe, Robert A. & Newton, Doris, 2018. "Three Decades of Consolidation in U.S. Agriculture," Economic Information Bulletin 276247, United States Department of Agriculture, Economic Research Service.
    12. Mugera, Amin W. & Langemeier, Michael R., 2011. "Does Farm Size and Specialization Matter for Productive Efficiency? Results from Kansas," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 43(4), pages 515-528, November.
    13. Howard D. Leathers & Melinda Smale, 1991. "A Bayesian Approach to Explaining Sequential Adoption of Components of a Technological Package," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(3), pages 734-742.
    14. Elvira Silva & Spiro E. Stefanou, 2007. "Dynamic Efficiency Measurement: Theory and Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 398-419.
    15. Lambert, Dayton M. & Paudel, Krishna P. & Larson, James A., 2015. "Bundled Adoption of Precision Agriculture Technologies by Cotton Producers," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 40(2), pages 1-21, May.
    16. Darlington Sabasi & C. Richard Shumway & Gregory M. Astill, 2019. "Off‐farm work and technical efficiency on U.S. dairies," Agricultural Economics, International Association of Agricultural Economists, vol. 50(4), pages 379-393, July.
    17. Hadri, Kaddour, 1999. "Estimation of a Doubly Heteroscedastic Stochastic Frontier Cost Function," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(3), pages 359-363, July.
    18. Reifschneider, David & Stevenson, Rodney, 1991. "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 715-723, August.
    19. Shapiro, Kenneth H & Muller, Jurgen, 1977. "Sources of Technical Efficiency: The Roles of Modernization and Information," Economic Development and Cultural Change, University of Chicago Press, vol. 25(2), pages 293-310, January.
    20. Cliff Huang & Tai-Hsin Huang & Nan-Hung Liu, 2014. "A new approach to estimating the metafrontier production function based on a stochastic frontier framework," Journal of Productivity Analysis, Springer, vol. 42(3), pages 241-254, December.
    21. Heimlich, Ralph E., 2000. "Farm Resource Regions," Agricultural Information Bulletins 33625, United States Department of Agriculture, Economic Research Service.
    22. Xiangfei Xin & Yi Zhang & Jimin Wang & John Alexander Nuetah, 2016. "Effects of Farm Size on Technical Efficiency in China's Broiler Sector: A Stochastic Meta-Frontier Approach," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 493-516, September.
    23. Matías L. Ruffo & Donald G. Bullock & Germán A. Bollero, 2009. "The Value of Variable Rate Technology: An Information-Theoretic Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 209-223.
    24. 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.
    25. Caudill, Steven B & Ford, Jon M & Gropper, Daniel M, 1995. "Frontier Estimation and Firm-Specific Inefficiency Measures in the Presence of Heteroscedasticity," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(1), pages 105-111, January.
    26. David S. Bullock & James Lowenberg‐DeBoer, 2007. "Using Spatial Analysis to Study the Values of Variable Rate Technology and Information," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(3), pages 517-535, September.
    27. Jürgen Müller, 1974. "On Sources of Measured Technical Efficiency: The Impact of Information," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(4), pages 730-738.
    28. Richard E. Just & Rulon D. Pope, 1979. "Production Function Estimation and Related Risk Considerations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(2), pages 276-284.
    29. Hung-Jen Wang, 2002. "Heteroscedasticity and Non-Monotonic Efficiency Effects of a Stochastic Frontier Model," Journal of Productivity Analysis, Springer, vol. 18(3), pages 241-253, November.
    30. Carlos D. Mayen & Joseph V. Balagtas & Corinne E. Alexander, 2010. "Technology Adoption and Technical Efficiency: Organic and Conventional Dairy Farms in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 181-195.
    31. Madhu Khanna & Onesime Faustin Epouhe & Robert Hornbaker, 1999. "Site-Specific Crop Management: Adoption Patterns and Incentives," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(2), pages 455-472.
    32. McFadden, Jonathan R., 2017. "Yield Maps, Soil Maps, and Technical Efficiency: Evidence from U.S. Corn Fields," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258120, Agricultural and Applied Economics Association.
    33. Schimmelpfennig, David, 2016. "Farm Profits and Adoption of Precision Agriculture," Economic Research Report 249773, United States Department of Agriculture, Economic Research Service.
    34. Ursula Aldana & Jeremy D. Foltz & Bradford L. Barham & Pilar Useche, 2010. "Sequential Adoption of Package Technologies: The Dynamics of Stacked Trait Corn Adoption," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(1), pages 130-143.
    35. Eric Ofori & Terry Griffin & Elizabeth Yeager, 2020. "Duration analyses of precision agriculture technology adoption: what's influencing farmers' time-to-adoption decisions?," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 80(5), pages 647-664, May.
    36. Mitchell, Sean & Weersink, Alfons & Erickson, Bruce, 2017. "Precision Agriculture in Ontario: 2017 Precision Agriculture Services Dealership Survey," Working Papers 264623, University of Guelph, Institute for the Advanced Study of Food and Agricultural Policy.
    37. Dubman, Robert, 2000. "Variance Estimation With USDA's Farm Costs and Returns Surveys and Agricultural Resource Management Study Surveys," Staff Reports 276685, United States Department of Agriculture, Economic Research Service.
    38. Bullock, David S. & Lowenberg-DeBoer, Jess & Swinton, Scott M., 2002. "Adding value to spatially managed inputs by understanding site-specific yield response," Agricultural Economics, Blackwell, vol. 27(3), pages 233-245, November.
    39. 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.
    40. Schimmelpfennig, David & Ebel, Robert, 2016. "Sequential Adoption and Cost Savings from Precision Agriculture," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(1), pages 1-19, 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. Xufeng Cao & Jiqin Han & Xueying Li, 2023. "Analysis of the Impact of Land Use Change on Grain Production in Jiangsu Province, China," Land, MDPI, vol. 13(1), pages 1-16, December.
    2. Tao, Yongming & Muneeb, Farhan Muhammad & Wanke, Peter Fernandes & Tan, Yong & Yazdi, Amir Karbassi, 2024. "Revisiting the critical success factors of entrepreneurship to promote Chinese agriculture systems: A multi-criteria decision-making approach," Socio-Economic Planning Sciences, Elsevier, vol. 94(C).
    3. Xiaohui Li & Hang Xiong & Jinghui Hao & Gucheng Li, 2024. "Impacts of internet access and use on grain productivity: evidence from Central China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-9, December.
    4. Hanson, Erik D. & Cossette, Max K. & Roberts, David C., 2022. "The adoption and usage of precision agriculture technologies in North Dakota," Technology in Society, Elsevier, vol. 71(C).
    5. repec:ags:aaea22:335541 is not listed on IDEAS
    6. Xiaoheng Zhang & Wanglin Ma & Puneet Vatsa & Shijie Jiang, 2023. "Short supply chain, technical efficiency, and technological change: Insights from cucumber production," Agribusiness, John Wiley & Sons, Ltd., vol. 39(2), pages 371-386, March.
    7. Brian E. Mills & B. Wade Brorsen & Davood Poursina & D. Brian Arnall, 2023. "Optimal grid size for site‐specific nutrient application," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 854-866, November.
    8. Ito, Junichi & Li, Xinyi, 2023. "Interplay between China’s grain self-sufficiency policy shifts and interregional, intertemporal productivity differences," Food Policy, Elsevier, vol. 117(C).
    9. Qing Zhang & Hongjuan Zhang, 2024. "Assessing Agri-Food Waste Valorization Challenges and Solutions Considering Smart Technologies: An Integrated Fermatean Fuzzy Multi-Criteria Decision-Making Approach," Sustainability, MDPI, vol. 16(14), pages 1-25, July.
    10. Hongjuan Zhang, 0000. "Assessing agro-food waste valorization challenges and solutions considering smart technologies: an integrated Fermatean fuzzy multi-criteria decision-making approach," Proceedings of Economics and Finance Conferences 14416198, International Institute of Social and Economic Sciences.
    11. Qiu Yuanhong & Zhang Ting & Yin Jian & Cao Yuequn & Xu Zetian, 2024. "Spatiotemporal evolution of efficiency and driving factors of Chinese herbal medicine industry," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(7), pages 17105-17129, July.
    12. Haonan Zhang & Zheng Chen & Jieyong Wang & Haitao Wang & Yingwen Zhang, 2023. "Spatial-Temporal Pattern of Agricultural Total Factor Productivity Change (Tfpch) in China and Its Implications for Agricultural Sustainable Development," Agriculture, MDPI, vol. 13(3), pages 1-17, March.
    13. Chrysanthos Maraveas & Christos-Spyridon Karavas & Dimitrios Loukatos & Thomas Bartzanas & Konstantinos G. Arvanitis & Eleni Symeonaki, 2023. "Agricultural Greenhouses: Resource Management Technologies and Perspectives for Zero Greenhouse Gas Emissions," Agriculture, MDPI, vol. 13(7), pages 1-46, July.
    14. Iordanis Parikoglou & Grigorios Emvalomatis & Doris Läpple & Fiona Thorne & Michael Wallace, 2024. "The contribution of innovation to farm-level productivity," Journal of Productivity Analysis, Springer, vol. 62(2), pages 239-255, October.
    15. Wang, Tong & Jin, Hailong & Sieverding, Heidi L. & Rao, Xudong & Miao, Yuxin & Kumar, Sandeep & Redfearn, Daren & Nafchi, Ali, 2022. "Understanding farmer perceptions of precision agriculture profitability in the U.S. Midwest," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322502, Agricultural and Applied Economics Association.

    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. Antti Saastamoinen, 2015. "Heteroscedasticity Or Production Risk? A Synthetic View," Journal of Economic Surveys, Wiley Blackwell, vol. 29(3), pages 459-478, July.
    2. DeLay, Nathan & Comstock, Haden, 2021. "Recent Trends in PA Technology Adoption and Bundling in CornProduction: Implications for Farm Consolidation," Western Economics Forum, Western Agricultural Economics Association, vol. 19(2), December.
    3. Subal C. Kumbhakar & Christopher F. Parmeter & Valentin Zelenyuk, 2022. "Stochastic Frontier Analysis: Foundations and Advances I," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 8, pages 331-370, Springer.
    4. Saldias, Rodrigo & von Cramon-Taubadel, Stephan, 2012. "Access to credit and the determinants of technical inefficiency among specialized small farmers in Chile," DARE Discussion Papers 1211, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    5. Sabrina Auci & Laura Castellucci & Manuela Coromaldi, 2021. "How does public spending affect technical efficiency? Some evidence from 15 European countries," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 108-130, January.
    6. Getu Hailu & B. James Deaton, 2016. "Agglomeration Effects in Ontario’s Dairy Farming," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(4), pages 1055-1073.
    7. Mark Andor & Frederik Hesse, "undated". "The StoNED age: The Departure Into a New Era of Efficiency Analysis? An MC study Comparing StoNED and the "Oldies" (SFA and DEA)," Working Papers 201285, Institute of Spatial and Housing Economics, Munster Universitary.
    8. Mark Andor & Frederik Hesse, 2014. "The StoNED age: the departure into a new era of efficiency analysis? A monte carlo comparison of StoNED and the “oldies” (SFA and DEA)," Journal of Productivity Analysis, Springer, vol. 41(1), pages 85-109, February.
    9. Paul, Satya & Shankar, Sriram, 2018. "Modelling Efficiency Effects in a True Fixed Effects Stochastic Frontier," MPRA Paper 87437, University Library of Munich, Germany.
    10. Young Hoon Lee, 2009. "Frontier Models and their Application to the Sports Industry," Working Papers 0903, Nam Duck-Woo Economic Research Institute, Sogang University (Former Research Institute for Market Economy), revised 2009.
    11. Satya Paul & Sriram Shankar, 2020. "Estimating efficiency effects in a panel data stochastic frontier model," Journal of Productivity Analysis, Springer, vol. 53(2), pages 163-180, April.
    12. K Hervé Dakpo & Laure Latruffe & Yann Desjeux & Philippe Jeanneaux, 2022. "Modeling heterogeneous technologies in the presence of sample selection: The case of dairy farms and the adoption of agri‐environmental schemes in France," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 422-438, May.
    13. Wang, Tong & Jin, Hailong & Sieverding, Heidi & Kumar, Sandeep & Miao, Yuxin & Rao, Xudong & Obembe, Oladipo & Mirzakhani Nafchi, Ali & Redfearn, Daren & Cheye, Stephen, 2023. "Understanding farmer views of precision agriculture profitability in the U.S. Midwest," Ecological Economics, Elsevier, vol. 213(C).
    14. repec:kap:iaecre:v:14:y:2008:i:1:p:76-89 is not listed on IDEAS
    15. Subal Kumbhakar & Gudbrand Lien & J. Hardaker, 2014. "Technical efficiency in competing panel data models: a study of Norwegian grain farming," Journal of Productivity Analysis, Springer, vol. 41(2), pages 321-337, April.
    16. Seunghwa Rho & Peter Schmidt, 2015. "Are all firms inefficient?," Journal of Productivity Analysis, Springer, vol. 43(3), pages 327-349, June.
    17. McFadden, Jonathan R., 2017. "Yield Maps, Soil Maps, and Technical Efficiency: Evidence from U.S. Corn Fields," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258120, Agricultural and Applied Economics Association.
    18. Tiziana Laureti, 2008. "Modelling Exogenous Variables in Human Capital Formation through a Heteroscedastic Stochastic Frontier," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 14(1), pages 76-89, February.
    19. Paul, Satya & Shankar, Sriram, 2018. "On estimating efficiency effects in a stochastic frontier model," European Journal of Operational Research, Elsevier, vol. 271(2), pages 769-774.
    20. Ajayi, Victor & Weyman-Jones, Tom, 2021. "State-level electricity generation efficiency: Do restructuring and regulatory institutions matter in the US?," Energy Economics, Elsevier, vol. 104(C).
    21. Concetta Castiglione & Davide Infante & Marta Zieba, 2018. "Technical efficiency in the Italian performing arts companies," Small Business Economics, Springer, vol. 51(3), pages 609-638, 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:jageco:v:73:y:2022:i:1:p:195-219. 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: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X .

    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.