Measuring technical efficiency and productivity growth: a comparison of SFA and DEA on Norwegian grain production data

Abstract

This article compares data envelopment analysis and stochastic frontier analysis to assess efficiency and productivity growth of Norwegian grain producers. Previous studies have dealt with either one of them and less of both. For the assessment of productivity growth or regress, Malmquist productivity indices are derived from both approaches. The data cover a 10-year period. We find consistency between the approaches to the extent that: (1) there are potentials for efficiency improvements, but the magnitudes depends on the model applied and by segmentation of the data set, (2) there has been a productivity improvement in the sector, on average in the interval 30–38% in the period studied and (3) technical change has had the greatest impact on productivity, indicating that producers have a tendency to catch-up with the front runners. In general, policy-makers are warned not to be indifferent with respect to the approach used for efficiency and productivity measurement as these may give different results.

Notes

¹ Feed Unit milk is equivalent to 1 kg of grain in water contents.