An Analysis of Technical Efficiency of Vegetables’ Household Production in Mongolia

Amar UuldRobert MagdaYuriy Bilan

DOI 10.7160/aol.2021.130310
No 3/2021, September
pp. 101-111

Uuld, A., Magda, R. and Bilan, Y. (2021) "An Analysis of Technical Efficiency of Vegetables’ Household Production in Mongolia", AGRIS on-line Papers in Economics and Informatics, Vol. 13, No. 3, pp. 101-111. ISSN 1804-1930. DOI 10.7160/aol.2021.130310.

Abstract

Vegetable production is one important agricultural product in crop production after wheat and potatoes production in Mongolia. Currently, household production dominates in total vegetable production (approximately 80 percent). Thus, the purposes of this paper were to measure technical efficiency and to determine influencing factors inefficiency on vegetable household production in Mongolia by using Stochastic production frontier analysis (SFA). Primary data was collected from randomly selected 260 vegetable households of Mongolia in 2019. The empirical result indicated that the average technical efficiency of the sampled vegetable household was 64.6 % (range between 43.2% and 99.9%) or they lost about 35.4% of the potential output due to technical inefficiency. We found that land and labor are the main influencing input factors of the household’s vegetable production. Also, the result of the technical inefficiency model, variables of age, sex, experience, and credit use obtained a negative relationship with inefficiency. The other variables are family size, education level, land fragmentation index was positively affected by technical inefficiency.

Keywords

Vegetable production, technical efficiency, stochastic frontier analysis, determinants of technical inefficiency.

References

  1. Abdulai, A. and Eberlin, R. (2001) "Technical efficiency during economic reform in Nicaragua: Evidence from farm household survey data", Economic Systems, Vol. 25, No. 2., pp. 113-125. ISSN 0939-3625. DOI 10.1016/S0939-3625(01)00010-3.
  2. Addai, K. N. and Owusu, V. (2014) "Technical efficiency of maize farmers across various agro-ecological zones of Ghana", Journal of Agriculture and Environmental Sciences, Vol. 3, No. 1, pp. 149-172. ISSN 2334-2404.
  3. Aigner, D. J., Lovell, C. A. K. and Schmidt, P. (1976) "Formulation and estimation of stochastic frontier production function models", Journal of Econometrics, Vol. 6, No. 1, pp. 21-37. ISSN 0304-4076. DOI 10.1016/0304-4076(77)90052-5.
  4. Anang, T. B., Bäckman, S. and Sipiläinen, T. (2016) "Agricultural microcredit and technical efficiency: The case of smallholder rice farmers in Northern Ghana", Journal of Agriculture and Rural Development in the Tropics and Subtropics, Vol. 117, No. 2, pp. 189-202. ISSN 2363-6033.
  5. Asefa, S. (2011) "Analysis of technical efficiency of crop-producing smallholder farmers in Tigray, Ethiopia", Munich Personal RePEc Archive, Vol. 6. [Online]. Available: http://mpra.ub.uni-muenchen.de/40461/ [Accessed: 23 Jan. 2021].
  6. Battese. G. E. and Broca, S. S. (1997) "Functional forms of stochastic frontier production functions and models for technical inefficiency effects: A Comparative study for wheat farmers in Pakistan", Journal of Productivity Analysis, Vol. 8, pp. 395-414. ISSN 2363-6033. DOI 10.1023/A:1007736025686.
  7. Battese. G. E. and Coelli, T. J. (1996) "Identification of factors which influence the technical inefficiency of Indian farmers", Australian Journal of Agricultural Economics, Vol. 40, No. 2, pp. 103-128. E-ISSN 1467-8489. DOI 10.1111/j.1467-8489.1996.tb00558.x.
  8. Battese, G. E and Coelli, T. J. (1995) "A Model for technical inefficiency effects in a stochastic frontier production function for panel data", Empirical Economics, Vol. 20, pp. 325-332. E-ISSN 1435-8921, ISSN 0377-7332. DOI 10.1007/BF01205442.
  9. Bayarsaihan, T. and Coelli, T. J. (2003) "Productivity growth in pre- 1990 Mongolian agriculture: Spiralling disaster or emerging success?", Agriculture Economics, Vol. 28, pp. 121-137. ISSN 0169-5150. DOI 10.1016/S0169-5150(02)00102-0.
  10. Bozoglu, M. and Ceyhan, V. (2007) "Measuring the technical efficiency and exploring the inefficiency determinants of vegetable farms in Samsun province, Turkey", Agricultural Systems, Vol. 94, No. 3, pp. 649-656. ISSN 0308-521X. DOI 10.1016/j.agsy.2007.01.007.
  11. Bravo-Ureta, B. E. and Pinheiro, A. E. (1993) "Efficiency Analysis of Developing Country Agriculture: A Review of the Frontier Function Literature", Agricultural and Resource Economics Review, Vol. 22, No. 1, pp. 88-101. E-ISSN 2372-2614, ISSN 1068-2805. DOI 10.1017/s1068280500000320.
  12. Bhattarai, K. (2019) "Consumers’ willingness to pay for organic vegetables: Empirical evidence from Nepal", Economics and Sociology, Vol. 12, No. 3, pp. 132-146. ISSN 2071-789X. DOI 10.14254/2071-789X.2019/12-3/9.
  13. Chen, Z., Huffman, W. E, and Rozelle. S. (2009) "Farm technology and technical efficiency: Evidence from regions in China", China Economic Review, Vol. 20, pp. 153-161. ISSN 1043-951X. DOI 10.1016/j.chieco.2009.03.002.
  14. Coelli, J. T., Prasada Rao, D. S, Donnell, O. J. C and Battese, E. J. (2005) "An introduction to efficiency and productivity analysis", Second edition, Springer. ISBN 978-0-387-25895-9.
  15. Reifschneider, D. and R. Stevenson, R. (1991) "Systematic Departures from the Frontier: A Framework for the Analysis of Firm Inefficiency", International Economic Review, Vol. 32, No. 3, pp. 715-723.ISSN 0020-6598.
  16. Farrell, M. J. (1957) "The Measurement of productive efficiency", Journal of the Royal Statistical Society, Vol. 120, No. 3, pp. 253-290. ISSN 0964-1998. DOI 10.2307/2343100.
  17. Fuwa, N., Edmonds, C. and Banik, P. (2007) "Are small-scale rice farmers in eastern India really inefficient ? Examining the effects of microtopography on technical efficiency estimates", Agriculture Economics, Vol. 36, pp. 335-346. ISSN 0169-5150. DOI 10.1111/j.1574-0862.2007.00211.x.
  18. Galnaitytė, A., Kriščiukaitienė, I., Baležentis, T. and Namiotko, V. (2017) "Evaluation of technological, economic and social indicators for different farming practices in Lithuania", Economics and Sociology, Vol. 10, No. 4, pp. 189-202. E-ISSN 2306-3459, ISSN 2071-789X. DOI 10.14254/2071-789X.2017/10-4/15.
  19. Huang, C. J. and Liu, J. (1994) "Estimation of a non-neutral stochastic frontier production function", The Journal of Productivity Analysis, Vol. 5, pp. 171-180. E-ISSN 1573-0441, ISSN 0895-562X. DOI 10.1007/BF01073853.
  20. Japan Fund for Poverty Reduction. (2017) "Mongolia: Community vegetable farming for livelihood improvement", Project Administration Manual. [Online]. Available: https://www.adb.org/sites/default/files/project-documents/50278/50278-001-pam-en.PDF [Accessed: 14 Feb. 2021].
  21. Kalirajan, K. (1981) "An Econometric analysis of yield variability in Paddy production", Canadian Journal of Agricultural Economics, Vol. 29, No. 3, pp. 283-294. ISSN 1744-7976. DOI 10.1111/j.1744-7976.1981.tb02083.x.
  22. Kiprop, N. I. S., Hillary, B. K., Mshenga, P. and Nyairo, N. (2015) "Analysis of technical efficiency among smallholder farmers in Kisii county, Kenya", IOSR Journal of Agriculture and Veterinary Science, Vol. 8, No. 3, pp. 50-56, E-ISSN 2319-2380.
  23. Kocisova, K., Gavurova, B. and Kotaskova, A. (2018) "A slack-based measure of agricultural efficiency in the European Union countries", Journal of International Studies, Vol. 11, No. 1, pp. 189-200. E-ISSN 2306-3483, ISSN 2071-8330. DOI 10.14254/2071-8330.2018/11-1/14.
  24. Kumbhakar, S. C., Wang, H. and Horncastle, A. (2015) "A Practitioner’s Guide to Stochastic Frontier Analysis Using Stata", Cambridge University Press. E-ISBN 978-1-107-02951-4. DOI 10.1017/CBO9781139342070.
  25. Laha, A. (2006) "Technical efficiency in Agricultural production and access to credit in West Bengal, India: A Stochastic Frontier Approach", International Journal of Food and Agricultural Economics, Vol. 1, No. 2, pp. 53-64. ISSN 2147-8988. DOI 10.22004/ag.econ.160094.
  26. Masterson, T. (2007) "Productivity, technical efficiency, and farm size in Paraguayan agriculture", Working paper, No. 490, [Online]. Available: http://www.levyinstitute.org/pubs/wp_490.pdf [Accessed: 14 Feb. 2021].
  27. Meeusen, W. and van den Broeck, J. (1977) "Efficiency estimation from Cobb-Douglas production functions with composed error", International Economic Review, Vol. 18, No. 2, pp. 435-444. ISSN 0020-6598. DOI 10.2307/2525757.
  28. Ministry of Food and Agriculture (2017) "Mongolian vegetable program", National program, [Online]. Available: https://www.legalinfo.mn/annex/details/8024?lawid=12881 [Accessed: 10 Feb. 2021].
  29. National Statistics Office of Mongolia (2018) "Agriculture statistics report", yearbook, Ulaanbaatar, Mongolia. [Online]. Available: https://www.1212.mn/ [Accessed: 10 Feb. 2021].
  30. National Statistics Office of Mongolia (2019) "Mongolian Statistical yearbook", Ulaanbaatar, Mongolia. [Online]. Available: https://www.1212.mn/ [Accessed: 10 Feb. 2021].
  31. Nyemeck, J., Tonye, J., Nyambi, G. and Akoa, M. (2008) "Factors affecting the technical efficiency among smallholder farmers in the slash and burn agriculture zone of Cameroon", Vol. 29, No. 5, pp. 531-545. ISSN 0306-9192. DOI 10.1016/j.foodpol.2004.07.013.
  32. SECiM (2016) "Current situation analysis of vegetable value chain in Mongolia", Technical report, [Online]. Available: http://books.xxaa-zainii-surgalt.mn/bookshelf/b98 [Accessed: 15 Feb. 2021].
  33. Seok, J. H., Moon, H., Kim, G. S. and Reed, M. R. (2018) "Is aging the important factor for sustainable agricultural development in Korea? Evidence from the relationship between aging and farm technical efficiency", Sustainability (Switzerland), Vol. 10, No. 7. ISSN 2071-1050. DOI 10.3390/su10072137.
  34. Swiss Agency for Development and Cooperation (2015) "Mongol potato program", [Online]. Available: https://www.eda.admin.ch/countries/mongolia/mn/home/chegzhlijn/chevlel/publikationen.html [Accessed: 24v Jan. 2021].
  35. Tan, S., Heerink, N., Kuyvenhoven, A. and Qu, F. (2010) "Impact of land fragmentation on rice producers’ technical efficiency in South-East China", NJAS - Wageningen Journal of Life Sciences, Vol. 57, No. 2, pp. 117-123, ISSN 1573-5214. DOI 10.1016/j.njas.2010.02.001.
  36. USAID (2014) "Vegetable value chain program in Mongolia", [Online]. Available: http://books.xxaa-zainii-surgalt.mn/bookshelf/b4 [Accessed: 24 Jan. 2021].
  37. Vasylieva, N. and James Jr., H. (2020) "Prospects of family farming: Ukrainian vs EU experience", Journal of International Studies, Vol. 13, No. 3, pp. 129-142 E-ISSN 2306-3483, ISSN 2071-8330. DOI 10.14254/2071-8330.2020/13-3/9.
  38. Wang, H. J. and Schmidth, P. (2002) "One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels", Journal of Productivity Analysis, Vol. 18, pp. 129-144. E-ISSN 1573-0441, ISSN 0895-562X. DOI 10.1023/A:1016565719882.

Full paper

  Full paper (.pdf, 442.94 KB).