Agro-climatic conditions and regional technical inefficiencies in agriculture

Date
2002
Authors
Demir, N.
Mahmud, S. F.
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Source Title
Canadian Journal of Agricultural Economics
Print ISSN
0008-3976
Electronic ISSN
1744-7976
Publisher
Wiley-Blackwell Publishing, Inc.
Volume
50
Issue
3
Pages
269 - 280
Language
English
Type
Article
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Abstract

A survey of applications of the Technical Inefficiency Effects (TIE) model suggests that agro-climatic and other environment variables are customarily omitted in the model specifications. The justification for such an omission is the assumption that these variables are beyond the control of the farmers and therefore should be treated as random variables. In this paper, we argue that in applications dealing with regional agricultural data, agro-climatic variables should not be treated as pure random terms. Historical differences in agro-climatic conditions are known with a reasonable degree of certainty across a larger region. Therefore, omission of such variables from the analysis may lead to inaccurate interregional technical inefficiency comparisons. In order to demonstrate the importance of agro-climatic variables in such analyses, we estimate the TIE model for Turkey. A translog stochastic frontier production function with agro-climatic variables such as rainfall and land quality is estimated, and it is shown not only that the agro-climatic variables are statistically significant but also that their omission substantially affects mean output elasticities and relative technical efficiencies.

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Keywords
Aves, Meleagris gallopavo
Citation
Published Version (Please cite this version)