PR. Estimating Input-specific Recommendations For Technically Inefficient Crop Farmers

The main objective of this paper is to demonstrate how data envelopment analysis (DEA) and production function analysis are combined to evaluate the input usage decisions of technically inefficient maize producers and to estimate potential yield gains from reallocating inputs. The data for this research originates from a production cost survey. Two distinct quadratic production functions were estimated for DEA-determined technically efficient and inefficient farmers using a dummy variable approach. Results indicate that the yield gains are large if farmers are able to produce in a technically efficient manner while maintaining current input levels. Results further indicate that even though a producer may be technically inefficient, yield gains and therefore increased profits are possible if such farmers adjust nitrogen application rates. The conclusion is that failure to recognise the fact that DEA-determined technically efficient and inefficient producers’ production processes are characterised by two distinct production functions renders uniform input recommendations inappropriate. In future, extension officers should aim to develop input recommendations taking these inefficiencies into account.

Keywords: technical efficiency, input recommendations, production functions, data envelopment analysis.

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Author(s): Grové, B., Kundhlande, G., Matthews, N.


Organizations(s): Dept. of Agricultural Economics, University of the Free State, Bloemfontein