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Economic performance and efficiency determinants of crop-producing farms in Norway

Author

Listed:
  • Habtamu Alem
  • Gudbrand Lien
  • J. Brian Hardaker

Abstract

Purpose - The purpose of this paper is to explore the economic performance of Norwegian crop farms using a stochastic frontier analysis. Design/methodology/approach - The analysis was based on a translog cost function and unbalanced farm-level panel data for 1991–2013 from 455 Norwegian farms specialized in crop production in eastern and central regions of Norway. Findings - The results of the analysis show that the mean efficiency was about 78–81 percent. Farm management practices and socioeconomic factors were shown to significantly affect the economic performance of Norwegian crop farms. Research limitations/implications - Farmers are getting different types of support from the government and the study does not account for the different effects of different kinds of subsidy on cost efficiency. Different subsidies might have different effects on farm performance. To get more informative and useful results, it would be necessary to repeat the analysis with less aggregated data on subsidy payments. Practical implications - One implication for farmers (and their advisers) is that many of them are less efficient than the estimated benchmark (best performing farms). Thus, those lagging behind the best performing farms need to look at the way they are operating and to seek out ways to save costs or increase crop production. Perhaps there are things for lagging farmers to learn from their more productive farming neighbors. For instance, those farmers not practicing crop rotation might be well advised to try that practice. Social implications - For both taxpayers and consumers, one implication is that the contributions they pay that go to subsidize farmers appear to bring some benefits in terms of more efficient production that, in turn, increase the supply of some foods so possibly making food prices more affordable. Originality/value - Unlike previous performance studies in the literature, the authors estimated farm-level economic performance accounting for the contribution of both an important farm management practice and selected socioeconomic factors. Good farm management practices, captured through crop rotation, land tenure, government support and off-farm activities were found to have made a positive and statistically significant contribution to reducing the cost of production on crop-producing farms in the Central and Eastern regions of Norway.

Suggested Citation

  • Habtamu Alem & Gudbrand Lien & J. Brian Hardaker, 2018. "Economic performance and efficiency determinants of crop-producing farms in Norway," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 67(9), pages 1418-1434, November.
  • Handle: RePEc:eme:ijppmp:ijppm-01-2018-0026
    DOI: 10.1108/IJPPM-01-2018-0026
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    Citations

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    Cited by:

    1. Hussein Al-Zyoud & Asheref Illiyan & Vasim Akram, 2022. "Impact of Economic Openness on Macro Technical Efficiency in South Asia," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 28(3), pages 91-103, November.
    2. Oana Coca & Diana Creangă & Ștefan Viziteu & Ioan Sebastian Brumă & Gavril Ștefan, 2023. "Analysis of the Determinants of Agriculture Performance at the European Union Level," Agriculture, MDPI, vol. 13(3), pages 1-23, March.
    3. Anita Rosli & Alias Radam & Khalid Abdul Rahim & Amin Mahir Abdullah, 2020. "Technical Efficiency among Pepper Farmers in Sarawak, Malaysia: A Stochastic Frontier Analysis," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(3), pages 729-739, October.
    4. Bachev, Hrabrin, 2022. "Как Да Оценим Управленческата Ефективност На Българските Земеделски Стопанства [How to assess the governance efficiency of Bulgarian agricultural farms]," MPRA Paper 113590, University Library of Munich, Germany.
    5. Marcomini, Gilson Rogério & Patino, Marco Tulio Ospina & Alam, Mohammad Jahangir, 2023. "Potato Production Strategies in Brazil: The Influence of Determinants of Technical and Economic Efficiency," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 11(2), April.
    6. Zhu, Liyun & Schneider, Kevin & Oude Lansink, Alfons, 2023. "Economic, environmental, and social inefficiency assessment of Dutch dairy farms based on the dynamic by-production model," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1134-1145.
    7. Matheus Koengkan & José Alberto Fuinhas & Emad Kazemzadeh & Fariba Osmani & Nooshin Karimi Alavijeh, 2022. "Measuring the economic efficiency performance in Latin American and Caribbean countries: An empirical evidence from stochastic production frontier and data envelopment analysis," International Economics, CEPII research center, issue 169, pages 43-54.
    8. Bachev, Hrabrin, 2022. "A framework for assessing the governance efficiency of agricultural farms," MPRA Paper 113696, University Library of Munich, Germany.
    9. Joanna Domagała, 2021. "Economic and Environmental Aspects of Agriculture in the EU Countries," Energies, MDPI, vol. 14(22), pages 1-23, November.
    10. Rosli, Anita & Radam, Alias & Rahim, Khalid Abdul & Abdullah, Amin Mahir, 2020. "Technical Efficiency Among Pepper Farmers in Sarawak, Malaysia: A Stochastic Frontier Analysis," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 10(03), January.

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