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An Investigation of Production Risk, Risk Preferences and Technical Efficiency: Evidence From Rainfed Lowland Rice Farms in the Philippines

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  • Villano, Renato A.
  • O'Donnell, Christopher J.
  • Battese, George E.

Abstract

Risk plays a vital role in farmers' decisions on input allocations and, therefore, output supply. This paper provides empirical evidence on the estimation of production risk, risk preferences and technical inefficiency. An eight-year panel data set is used for 46 rice farmers from a representative rainfed lowland environment in Central Luzon, Philippines. The heteroskedastic and stochastic frontier frameworks are reconciled and extended to accommodate the risk preferences of farmers in an analysis of production risk. Results show that technical inefficiency is overstated in risky production environments where farmers are risk-averse.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:uneewp:12953
    DOI: 10.22004/ag.econ.12953
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    References listed on IDEAS

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    Cited by:

    1. Dahmardeh, Nazar & Shahraki, Ali Sardar, 2015. "Evaluation Factors Affecting of Risk Production in Sistan Grape Growers by using Stochastic Frontier Approach," International Journal of Agricultural Management and Development (IJAMAD), Iranian Association of Agricultural Economics, vol. 5(1), March.
    2. Serra, Teresa & Zilberman, David & Gil, Jose Maria, 2008. "Farms' technical inefficiencies in the presence of government programs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 1-20.
    3. Villano, Renato A. & Lucas, Marilou P. & Pandey, Sushil, 2005. "An Analysis of Scope Economies and Technical Efficiency in Intensive Rainfed Lowland Rice-based Cropping Systems in Northwest Luzon, Philippines," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 139294, Australian Agricultural and Resource Economics Society.
    4. Hurley, Terrance M., 2010. "A review of agricultural production risk in the developing world," Working Papers 188476, HarvestChoice.

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