scholarly journals Estimating Efficiency Performance of Decision-Making Unit by using SFA and DEA Method: A Cross-Sectional Data Approach

2018 ◽  
Vol 7 (4.33) ◽  
pp. 25
Author(s):  
Roslah Arsad ◽  
Zaidi Isa ◽  
Siti Nabilah Mohd Shaari
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Likelihood Estimation ◽  
Parametric Models ◽  
Comparative Performance ◽  
Cross Sectional ◽  
Frontier Analysis ◽  
Decision Making Unit ◽  
Dea Method

In this paper, a cross-sectional samples data of 115 Malaysian stocks have been employed to compare both Data Envelopment Analysis (DEA) method and Stochastic Frontier Analysis (SFA) method. These approaches are used to provide a review of frontier conceptual measurement, strength and limitation of the parametric and non-parametric models. Stochastic frontier production function of Cobb-Douglas type was utilized for the estimation. The function was estimated using the maximum likelihood estimation technique. Two models in DEA, DEA-CCR and DEA-BCC are applied in this study and the ranking correlation between SFA method and both models DEA are determined by using the Spearman rank method. The result revealed using SFA, the mean technical efficiency of sample consumer product companies is 37.5% and implies that companies operating at means level of technical efficiency could produce 80.1% more output for given level of inputs if they become technically more efficient. From empirical results of the SFA method, we determined that the deviations from the efficient frontiers of production functions are largely attributed to inefficiency effects (technical inefficiency). Finally, the findings also showed that the difference in ranking stocks performance using DEA-CCR, DEA-BCC and SFA methods. The main contribution of the paper is showing the comparative performance based on both model, DEA and SFA method using financial ratio.  

scholarly journals Technical Efficiency and Small Scale Maize Producers in Mwanza Region: A Stochastic Frontier Analysis

2021 ◽  
Vol 9 (3) ◽  
Author(s):  
Mukole Kongolo
Keyword(s):  
Technical Efficiency ◽  
Best Practice ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Likelihood Estimation ◽  
Estimation Procedure ◽  
Farm Size ◽  
Small Scale ◽  
Maize Production ◽  
Frontier Analysis

This study measured technical efficiency and its determinants in maize production by small-scale producers in Mwanza region, using a stochastic frontier production function approach. A randomly selected sample of participants in the two districts was used. The Maximum Likelihood estimation procedure was followed to obtain the determinants of technical efficiency and technical efficiency levels of small-scale maize producers. The minimum and maximum values of technical efficiency were between 20% and 91%, indicating that the least practices of specific producer operates at a minimum level of 20%, while the best practice producers  operate  at 91% technical efficiency  level respectively. The summary results of the mean technical efficiency was 63%. The main determinants of technical efficiency were labour, farm size, producer’s experience, producer’s age, family size which were all positive and statistically significant. The findings suggest that the average efficiency of small-scale maize producers could be improved by 37% through better use of existing resources and technology. These findings highlight the need for action by government to assist small-scale maize producers improve efficiency.

scholarly journals Factors Affecting Technical Efficiency of Rubber Smallholders in Negeri Sembilan, Malaysia

2017 ◽  
Vol 9 (5) ◽  
pp. 226
Author(s):  
A. Aliyu ◽  
Ismail Abd Latif ◽  
Mad Nasir Shamsudin ◽  
Nolila Mohd Nawi
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Likelihood Function ◽  
Stochastic Frontier ◽  
Efficiency Score ◽  
Farm Size ◽  
Cross Sectional ◽  
Frontier Analysis ◽  
The Mean ◽  
Size Task

The main objective of the study was to figure out, identify and analyse the technical efficiency of rubber smallholders’ production in Negeri Sembilan, Malaysia. Multi-stage data collection procedures, comprising both purposive and random sampling techniques, were used. Using structured questionnaires, farm-level information with cross sectional data from five districts of Negeri Sembilan, were employed in the study. A parametric Stochastic Frontier Analysis (SFA), with a transcendental logarithmic (Translog) functional form, was used in the study. The descriptive statistics results revealed that, the mean rubber yield was 5465 kg while that of the seven inputs used include 1.2 ha, 602.7, 2.33, 363.6 kg, 13.0 lit, 13.2 man days and 2.47 respectively for farm size, task, farm tools, fertilizer, herbicides, labour and rubber clones.The inferential statistics showed that, the mean technical efficiency was found to be 0.73 with a standard deviation of 0.089. Thus, this translates that 27% accounted for technical inefficiency. Both the sigma square and gamma coefficients were found to be statistically significant at 1% level. The Log Likelihood Function (LLF) and the Log Rati (LR) test were found to be respectively 167.7 and 34.07. The results further revealed that, although none of the farms were found to be on the frontier, however, 9 farms were very near the frontier with efficiency score range between 0.90-0.99. And twenty (20) firms have range 0.80-0.90. Race, Tapping experience, household number and extension agent’s visits were found to be technically significant and are thus critical in determining technical efficiency of rubber smallholders in Negeri Sembilan, Malaysia.

The Effects of Improved Cassava Variety Adoption on Farmers’ Technical Efficiency in Indonesia

2021 ◽  
Vol 11 (4) ◽  
pp. 269-278
Author(s):  
Syafrial ◽  
Hery Toiba ◽  
Moh Shadiqur Rahman ◽  
Dwi Retnoningsih
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Probit Regression ◽  
Cross Sectional ◽  
Factors Affecting ◽  
Frontier Analysis ◽  
Access To Credit ◽  
Farm Work ◽  
The Impact

The adoption of technological innovations, such as an improved variety, has been widely promoted worldwide to improve agricultural productivity. This study aimed to examine factors affecting farmers’ decision to adopt a new improved cassava varieties (NICV), and to estimate the effects of NICV adoption on farmers’ technical efficiency. This research used cross-sectional data from 300 cassava farmers in East Java, Indonesia. Furthermore, the data were analyzed by probit regression to examine factors affecting farmers’ decision to adopt NICV. Propensity score matching (PSM) procedures and stochastic frontier analysis were applied to evaluate the impact of NICV adoption on farmers’ technical efficiency. The results indicated that adoption was highly influenced by cooperative membership, access to credit, internet access, certified land, and off-farm work. The stochastic frontier analysis, by controlling the matched sample using PSM procedures, demonstrated that NICV adoption positively and significantly impacted farmers’ technical efficiency. Those who adopted NICV showed a higher technical efficiency level than those who did not. This finding implies that improved varieties could be further promoted to increase productivity. The research suggests that there is a need to improve NICV adoption to increase the levels of technical efficiency and productivity.

scholarly journals The Determinants of Technical Efficiency of Hazelnut Production in Azerbaijan: An Analysis of the Role of NGOs

2019 ◽  
Vol 11 (16) ◽  
pp. 4332 ◽  
Author(s):  
Orkhan Guliyev ◽  
Aijun Liu ◽  
Gershom Endelani Mwalupaso ◽  
Jarkko Niemi
Keyword(s):  
Technical Efficiency ◽  
Production Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Stakeholder Involvement ◽  
Cross Sectional ◽  
Frontier Analysis ◽  
Government Organizations ◽  
Good Organization

The role of non-government organizations (NGOs) has been commendable in promoting sustainable farming. Through mobilization of existing resources and provision of training to farmers on various agriculture subjects, NGOs could trigger increased productivity and agricultural sustainability. However, empirical evidence on this claim is limited and no study recognizes the supporting conditions required for NGO intervention to improve productivity. Cross-sectional data from hazelnut farmers in Azerbaijan are used to evaluate the role of NGO intervention in improving farmers’ technical efficiency. To this end, stochastic frontier analysis (SFA) is applied to study hazelnut farmers’ production efficiency. Three different measures are employed to estimate NGO intervention: Training, subsidy and, a combination of training and subsidy. The results indicate that NGO intervention is not significant in influencing technical efficiency. This is attributable to the absence of good organization, innovation orientation, accountability and stakeholder involvement and support which are the necessary supporting conditions facilitating an enabling environment for NGO intervention to improve farmers’ technical efficiency. Therefore, we recommend policy directed at addressing these issues in order to simultaneously enhance farmers’ productivity and improve the functioning of the NGOs. Beyond NGO intervention, encouraging farmers to specialize in hazelnut production and allocating more suitable land for hazelnut production will also improve farmers’ technical efficiency significantly.

scholarly journals THE EFFICIENCY OF LARGE AND MEDIUM SCALE OF THE FOOD AND BEVERAGE INDUSTRIAL PRODUCTION IN EAST JAVA: DATA ENVELOPMENT ANALYSIS (DEA) AND STOCHASTIC FRONTIER ANALYSIS (SFA) APPROACHES

2021 ◽  
Vol 2 (2) ◽  
pp. 139-157
Author(s):  
Shochrul Rohmatul Ajija ◽  
Mohammad Zeqi Yasin ◽  
Jarita Duasa
Keyword(s):  
Data Envelopment Analysis ◽  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Data Envelopment ◽  
Frontier Analysis ◽  
Beverage Industry ◽  
Food And Beverage Industry ◽  
Food And Beverage ◽  
Dea Method

This study aims to estimate the technical efficiency of food and beverage industry in East Java in 2011 to 2013 using micro data at the company level. Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA) are used to estimate technical efficiency. The output variable was the value of production, while input variables were capital, labor, raw material, and energy. The Likelihood Ratio test dictates that the Translog production function is more appropriate for use in this study. The estimation results show that the efficiency of food and beverage companies in East Java by using SFA has decreased significantly by 3.02%, whereas with the DEA method, the average technical efficiency has increased by 0.583% compared to the beginning of the year in 2011. In addition, there is difference in the efficiency value between SFA and DEA. The technical efficiency value of SFA calculation is greater than that of DEA. The dissimilarity is caused by the difference of specification in both methods related to the interaction between uncaptured variables in the DEA method. The results of this policy have implications on the government's obligation to pay attention to the food and beverage industry in order to suppress the company’ various operating costs, such as maintenance for old machines, which has an impact on on technical efficiency or improve the ability of labor in terms of machinery utilization. Therefore, in the following year, the performance of the food and beverage industry as the largest sub-sector in manufacturing is able to show the progress.

scholarly journals Technical Efficiency of Smallholder Tomato Production in Semi-Urban Farms in Cameroon: A Stochastic Frontier Production Approach

2017 ◽  
Vol 7 (4) ◽  
pp. 27 ◽  
Author(s):  
Martin Paul Jr. Tabe-Ojong ◽  
Ernest L. Molua
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Smallholder Farmers ◽  
Research Question ◽  
Stochastic Frontier ◽  
Negative Influence ◽  
Farm Size ◽  
Primary Data ◽  
Tomato Production ◽  
Frontier Analysis

Agriculture is the mainstay of Cameroon’s economy as it serves the purposes of food, livelihood and employment. Nevertheless, the country’s agriculture is plagued by low productivity and inefficiency in production. One of the main reasons for low productivity is the inability of farmers to fully exploit available technologies and production techniques. An important research question that comes to mind is, what are the major factors that hinder the technical efficiency of smallholder farmers? This study thus aimed to determine the level of technical efficiency in the production of tomato in smallholder farms, relying on primary data collected using a structured survey instrument administered to 80 tomato farmers in the Buea municipality of Cameroon. Data was analyzed using descriptive statistics and a stochastic frontier analysis method in the Cobb-Douglas production function. The STATA.14 software was used to obtain both stochastic frontier estimates and the determinants of technical efficiency. The results indicate that farmers are not fully technically efficient with a mean technical efficiency score of 0.68 with one farmer operating on the frontier. The study also revealed that most of the farmers irrespective of the size of the holdings have shown technical inefficiency problems. The older farmers were observed with the best measures of technical efficiency. Education, age and the adoption and practice of agronomic techniques had a positive and significant influence on technical efficiency while the nearest distance to the extension agent had a rather negative influence on technical efficiency. The input-output relationship showed that the area of tomato cultivation and the quantity of improved seed used were positive and significantly related to output at the 5% level of probability. As a result, it is recommended that farmers should increase their farm size, use of improved seeds and the adoption and practice of novel techniques in production. More emphasis should be placed on extension agents as they have a significant role to play in terms of improving and augmenting farmers’ education and information base through on farm demonstrations and result oriented workshops as all this will ensure increased production and productivity thereby increasing technical efficiency and achieving food self-sufficiency.

scholarly journals Technical Efficiency among Pepper Farmers in Sarawak, Malaysia: A Stochastic Frontier Analysis

2020 ◽  
Vol 10 (3) ◽  
pp. 729-739
Author(s):  
Anita Rosli ◽  
Alias Radam ◽  
Khalid Abdul Rahim ◽  
Amin Mahir Abdullah
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Agricultural Practices ◽  
Piper Nigrum ◽  
Maximum Output ◽  
Full Time ◽  
Frontier Analysis ◽  
One Step ◽  
The Mean

This study aimed to estimate the technical efficiency among pepper (Piper nigrum. L) farmers in Sarawak, Malaysia, using Stochastic Frontier Analysis (SFA). SFA involves a one-step process that can estimate technical inefficacy factors simultaneously with the production frontier. 678 pepper farmers were involved in this study, and the data were collected from 2012 to 2013. The mean score for technical efficiency was 0.518, indicating that pepper farmers were not efficient. However, the inefficiency model showed that education level, membership in farmers’ association, full-time as a pepper farmer, attending courses and visiting sample farms were factors that significantly improved inefficiency. The major problem of pepper farming in Sarawak is poor agricultural practices where farmers do not fully utilize the available agricultural inputs to produce maximum output. Based on the findings, farmers must improve their knowledge and skills in pepper farming through agronomic education.

scholarly journals The trends in efficiency of Lithuanian dairy farms: a semiparametric approach

2015 ◽  
Vol 37 (2) ◽  
pp. 167-178 ◽  
Author(s):  
Tomas Baležentis ◽  
Tianxiang Li ◽  
Alvydas Baležentis
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Dairy Farms ◽  
Random Coefficients ◽  
Family Farms ◽  
Frontier Analysis ◽  
Semiparametric Approach ◽  
Farm Accountancy Data Network ◽  
Development Paths

This study aims at analysing the trends in efficiency of Lithuanian dairy farms and thus identifying the prospective development paths. The semiparametric approach based on nonparametric regression and Stochastic Frontier Analysis is applied for the analysis. The research relies on Farm Accountancy Data Network and covers family farms. The period of 2004–2011 is considered. In order to identify the underlying trends in dairy farming, we focus on such features as technical efficiency, partial elasticities, and elasticity of scale. The semiparametric approach yielded rather high efficiencies. Specifically, the average technical efficiency of 89% was observed. A decline in technical efficiency during 2004–2011 is present for both point estimates and associated bounds of the confidence interval. Analysis of the elasticity of scale implies that most of the farms could still increase their scale of operation. The obtained results were confirmed by a parametric random coefficients model.

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