The Impact of Agricultural Loans on the Technical Efficiency of Rice Farmers in the Upper North of Thailand
Rice is the major crop in Thailand and it will remain so as long as it continues to be the major export crop and the staple food of the Thai population. However, the fact is that, although Thailand is the main rice-exporting country in the world, its rice yields are among the lowest in Asia (Office of Agricultural Economics, 2004a, b). This might imply low productivity and high technical inefficiency in major rice production. In an attempt to resolve this problem, the Thai government has promoted the use of inputs in rice production, such as chemical fertiliser, high-yielding varieties and chemicals, to increase the yields. The total amount of chemical fertiliser that was imported increased from about 1.3 million tonnes in 1985 to 3.9 million tonnes in 2004, with an annual growth rate of 4.6%. The value of imported chemical fertiliser also increased with a higher annual growth rate of 8.7%. The increasing use of chemical fertiliser and chemicals whose prices have been rising continuously has resulted in substantial increases in production costs. ... This paper aims to answer two questions: how has rural credit contributed to the production of rice? and how do agricultural loans from the rural financial institutions affect the technical efficiency of rice farmers? This study is based on data from farmers in Chiang Mai and Chiang Rai provinces which are the main areas for major rice production in the Upper North sub-region. The results from this study will be useful for determining the government policies on rural financial institutions. This paper is set out as follows: Sect. 2 provides an overview of the rural financial institutions. Section 3 presents survey data on rice farmers and model specifications. Section 4 discusses the results from the translog stochastic frontier production function. The last section provides policy implications and conclusions.
Technical Efficiency of South African Banks in Generating Interest and Noninterest Income: A Stochastic Frontier Analysis
This study applies stochastic frontier analysis to estimate the technical efficiencies of the four largest banks in South Africa, for the period 1994 to 2010, with regard to their generation of interest income and noninterest income. Interest income and noninterest income of the banks are investigated separately using a stochastic frontier production function model. A stochastic frontier output-orientated distance function is also estimated in order to investigate the changes in interest and noninterest income for the banks. Using the stochastic production frontier model, it is found that deposits do not have any significant influence on the levels of interest and noninterest incomes of these banks. The inefficiency effects for the generation of interest income were found to significantly decline for larger values of loans and investments and interest costs, but increased with increasing values of financial capital and also increased over time. Using an alternative approach involving an output distance function for the two income variables, we find that deposits have a significant effect on the explanation of the interest and noninterest incomes and that inefficiency effects are still significant in explaining the generation of these incomes.
Metafrontier frameworks for the study of firm-level efficiencies and technology ratios
This paper uses the concept of a metafrontier to compare the technical efficiencies of firms that may be classified into different groups. The paper presents the basic analytical framework necessary for the definition of a metafrontier, shows how a metafrontier can be estimated using non-parametric and parametric methods, and presents an empirical application using cross country agricultural sector data. The paper also explores the issues of technological change, time-varying technical inefficiency, multiple outputs, different efficiency orientations, and firm heterogeneity.
Productivity and Efficiency of Farmers Growing Four Popular Wheat Varieties in Punjab, Pakistan
HarvestPlus seeks to select one or more wheat varieties in Pakistan to biofortify with zinc to improve the health of the Pakistani population, especially women and children. The choice of varieties to enrich, and their diffusion patterns, will influence the productivity and efficiency of wheat production. This analysis seeks to (1) compare the relative productivity and efficiency of farmers currently growing the most widely diffused wheat varieties, and (2) update our understanding of factors that influence productivity and efficiency of wheat production. We estimate a stochastic production function model with data from a survey of wheat farmers conducted in Punjab, Pakistan, in 2011. We find no differences in technical inefficiency effects associated with farmers growing the top four varieties, either alone or in combination with other varieties. With respect to human capital, older farmers tend to be more technically inefficient than younger farmers, but education has no statistical significance. Wheat farmers with access to extension advice are more efficient. Smaller-scale farmers and those in the mixed production zone tend to be more technically inefficient. Later adopters were not less efficient than earlier adopters, but time to varietal change is negatively related to the efficiency of wheat production. Farmers growing wheat in the rice-wheat and cotton-wheat zones tend to be less productive (but more efficient) than farmers from the mixed zone. Finally, farmers whose land suffered from severe salinity or severe toxicity are less productive and efficient than other farmers.