Firm and product‐specific technical efficiencies in a multiproduct cycle system

Abstract

Measures of technical efficiency were estimated using stochastic translog production frontiers for a sample of farmers operating in a rainfed area in India. These estimates were farm‐specific as opposed to being based on deviation from an average sample efficiency. In contrast to other studies, farm‐specific efficiency estimates were obtained for farmers growing multiple outputs in which the production levels were interrelated and each product was competing for the farm's inputs. The results of the study show that on average, sample participants can increase their farm output by about 30 per cent (35 per cent, 28 per cent and 32 per cent respectively in the production of rice, corn and rice) by efficient use of existing inputs rather than by incurring any additional expenditures on inputs. The empirical results imply that the potential for increasing farm outputs varies widely across farms.

Notes

Senior Research Fellow, Senior Fellow, Department of Economics, Research School of Pacific Studies, Australian National University Canberra.