Drivers of Farm Efficiency in Turkey: A Stochastic Frontier Analysis
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Jun 1, 2015
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Abstract
This paper analyzes the efficiency structure of Turkish agriculture in farm household level by using various models of stochastic frontier analysis. A household level survey conducted in 2002 and 2004 is used in the analysis. Firstly, an efficient production frontier is estimated by a panel data model. By using these estimates, relative importance of inputs and their interaction with various farm characteristics are inspected. The parameters of production frontier show that agricultural production is crucially dependent on land and there is an excessive employment of labor. Secondly, the efficiency scores are estimated at farm household level. The results are reported according to NUTS-I regional classification and many other farm specific characteristics. The western parts of the country are found to be relatively more efficient and there is a high deviation in the mean efficiencies of different regions. There is an increase in mean efficiencies of all regions from 2002 to 2004. Besides, crop patterns, farm size, education level of household chief and irrigation are found to be effective on efficiency.
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Dudu, H., Cakmak, E. and Öcal, N. (2015) “Drivers of Farm Efficiency in Turkey: A Stochastic Frontier Analysis”, World Journal of Applied Economics, 1(1), pp. 45-63. doi: 10.22440/EconWorld.J.2015.1.1.HD.0005.
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References
Afriat S.N. (1972). Efficiency Estimation of Production Functions. International Economic Review, 13(3), 568–598. DOI: 10.2307/2525845.
Aigner, D.J., Chu, S.F. (1968). On Estimating the Industry Production Function. American Economic Review, 58(4), 826–39. http://www.jstor.org/stable/1815535.
Aigner, D.J., Lovell, C.A.K., Schmidt, P.J. (1977). Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6, 21–37. DOI: 10.1016/0304-4076(77)90052-5.
Akcay, Y. and Esengun, K. (1999). The Efficiency of Resource Allocation and Productivity in the Agricultural Farms in Kazova Region of Tokat Province, Turkish Journal of Agriculture and Forestry, 23, 831-842.
Akder, H., Kasnakoglu, H., Cakmak, E.H. (2000). Turkey: Sources of Growth in Turkish Agriculture, in Turkey: Country Economic Memorandum, Structural Reforms for Sustainable Growth, Background Papers, World Bank, Washington, DC.
Battese, G.E., Coelli, T.J. (1992). Frontier Production Functions, Technical Efficiency and Panel Data: With Application to Paddy Farmers in India. Journal of Productivity Analysis, 3(1–2), 153–169. DOI: 10.1007/BF00158774.
Battese, G.E., Coelli, T.J. (1995). A model for technical inefficiency effects in a stochastic frontier production function for panel data. Journal of Empirical Economics, 20(2), 325–332. DOI: 10.1007/BF01205442.
Batesse, G.E., Rao, D.S.P., O'Donnell, C.J. (2004). A Metafrontier Production Function for Estimation of technical Efficiencies and Technology gaps for Firms Operating Under Different Technologies, Journal of Productivity Analysis, 21, 91-103. DOI: 10.1023/B:PROD.0000012454.06094.29.
Batesse, G.E., Broca S.S. (1997). Functional Forms of Stochastic Frontier Production Functions and Models for Technical Inefficiency Effects: A comperative Study for Wheat Farmers in Pakistan, Journal of Productivity Analysis, 8, 395–414. DOI: 10.1023/A:1007736025686.
Battese, G.E., Coelli, T.J., (1993). A stochastic frontier production function incorporating a model of technical inefficiency effects. Working Papers in Econometrics and Applied Statistics vol. 69, Department of Econometrics, University of New England, Armidale.
Battese, G.E., Corra, G. (1977). Estimation of a Production Frontier Model with Application to the Pastoral Zone of Easter Australia. Australian Journal of Agricultural Economics, 21(3), 167–179. DOI: 10.1111/j.1467-8489.1977.tb00204.x.
Chavas, J.P., Petrie R., Roth, M. (2005). Farm Household Production Efficiency: Evidence From the Gambia, American Journal of Agricultural Economics, 87(1), 160-179. DOI: 10.1111/j.0002-9092.2005.00709.x.
Coelli, Rahman and Thirtle (2003). A Stochastic frontier approach to total factor productivity measurement in Bangladesh crop agriculture 1961-92, Journal of International Development, 15, 321-333. DOI: 10.1002/jid.975.
Cornwell, C., Schmidt, P., Sickles, R.C. (1990). Production Frontiers with Cross- Sectional and Time-Series Variations in Efficiency Levels. Journal of Econometrics, 46(1/2), 185–200. DOI: 10.1016/0304-4076(90)90054-W.
Cakmak, E.H. (2004). Structural Change and Market Opening in Turkish Agriculture, Paper presented in "Seminaire Analyse comparee des relations agricoles en libre-echange Nord-Sud" Monpellier.
Cakmak, E.H., Akder, H. (2005). DTO ve AB'deki Gelismeler Isiginda 21. Yuzyilda Turkiye Tarimi, (in Turkish), TUSIAD-T/2005-06/397, July, Istanbul: Lebib Yalkim Yayinevi.
Cakmak, E.H., Dudu, H., Ocal, N. (2008). Turk Tarim Sektorunde Etkinlik: Yontem ve Hanehalki Duzeyinde Nicel Analiz [Efficiency in Turkish Agricultural Sector: Method and Farm Household Level Quantitative Analysis], (in Turkish) TEPAV Yayinlari: Ankara. available at http://goo.gl/qIn4A.
Cakmak, E.H., Tozanli, S. Dudu, H. Kirisci E.N. (2004). Characterization of Agricultural And Agro-Industrial Sectors in Turkey, Report for the Project "Impacts of agricultural trade liberalization Between the EU and Mediterranean Countries" supported by Framework Program 6 of European Union, http://eumed-agpol.iamm.fr/doc/reports/turquie_d3.pdf.
Cakmak, E.H., Zaim, O. (1998). Labor and Land Productivity in Turkish Agriculture, in Employment in Agriculture Study, ed. Tümay Bulutay, Ankara: State Institute of Statistics Publications.
Dudu, H. (2006). Efficiency in Turkish Agriculture: A Farm Household Level Analysis, Middle East Technical University, Department of Economics, unpublished M.Sc. Thesis.
Fare, R., Grosskopf, S., Lovell, C.A.K. (1985). The Measurement of Efficiency of Production, Kluver-Nijhoff Publishing, Boston. DOI: 10.1007/978-94-015-7721-2.
Farrell, M.J. (1957). The Measurement of Productive Efficiency, Journal of Royal Statistical Society, Series A, General. 120, Part 3, 253-281. DOI: 10.2307/2343100.
G&G Consulting, Baskent Unv. Development Foundation, TNS Siar JV (2003). Agricultural Reform Implementation Project Quantitative Household Survey Final Report.
G&G Consulting, Baskent Unv. Development Foundation, TNS Siar JV (2005). Agricultural Reform Implementation Project Quantitative Household Survey Final Report.
Gabrielsen, A. (1975). On Estimating Efficient Production Functions. Working Paper, no A-35, Chr. Michelsen Institute, Department of Humanities and Social Sciences, Bergen, Norway.
Greene, W.M. (1980). Maximum likelihood Estimation of Econometric Frontier Functions. Journal of Econometrics, 13(1), 27–56. DOI: 10.1016/0304-4076(80)90041-X.
Kepenek, Y., Yenturk, N. (2001). Turkiye Ekonomisi, 12th ed. Istanbul: Remzi Kitabevi.
Kumbhakar, S.C. (1990). Production Frontiers, Panel Data and Time-Varying Technical Inefficiency. Journal of Econometrics, 46(1/2), 201–211. DOI: 10.1016/0304-4076(90)90055-X.
Kumbhakar, S.C., Lovell, C.A.K. (2000). Stochastic Frontier Analysis, Cambridge University Press, Cambridge. DOI: 10.1017/CBO9781139174411
Lundell, M., Lampietti, J., Pertev, R., Pohlmeier, L., Akder, H., Ocek, E., Jha, S. (2004). Turkey: A Review of the Impact of The Reform of Agricultural Sector Subsidization. World Bank: Washington, D.C.
Meeusen, W., Van den Broeck, J. (1977). Efficiency Estimation from Cobb-Douglas production functions with composed error. International Economic Review, 18, 435–444. DOI: 10.2307/2525757.
Murillo-Zamarano, L.R. (2004). Economic Efficiency and Frontier Techniques, Journal of Economic Surveys, 18(1), 33-77. DOI: 10.1111/j.1467-6419.2004.00215.x.
Ozkan, B. Akcaoz, H., Fert, C. (2004). Energy input-output Analysis in Turkish Agriculture, Renewable Energy, 29, 39-5. DOI: 10.1016/S0960-1481(03)00135-6.
Pitt, M.M., Lee, L.F. (1981). The Measurement and Sources of Technical Inefficiency in the Indonesian Weaving Industry, Journal of Development Economics, 9, 43–64. DOI: 10.1016/0304-3878(81)90004-3.
Richmond, J. (1974). Estimating the Efficiency of Production. International Economic Review, 15, 515–521. DOI: 10.2307/2525875.
Schmidt, P., Sickles, R.C. (1984). Production Frontiers and Panel Data. Journal of Business and Economic Statistics, 2, 299–326. DOI: 10.1080/07350015.1987.10509583.
Mahmud, S.F., Demir, N. (2003). Agro-Climatic Conditions and Regional Inefficiencies in Agriculture, Canadian Journal of Agricultural Economics, 50, 269-280. DOI: 10.1111/j.1744-7976.2002.tb00337.x.
Mahmud, S.F., Demir, N.(1999). Regional Technical Efficiency Differentials in the Turkish Agriculture: A Note, Indian Economic Review, 33, 197-206.
Toksoy, D., Ayyildiz, H. (2004). Measuring the Marketing Performances of State Nurseries in Turkey: Examples of Eastern Anatolia and Black Sea Region Nurseries, Turkish Journal of Agriculture and Forestry, 28, 443-456.
Uzunlu, V., Bayaner, A. , Beniwal, P.S. (1999). Problem Identification and Priority Setting in Agricultural Research: The Case of The Eastern Margin of Central Anatolia, Turkish Journal of Agriculture and Forestry, 23, 679-686.
Xu, X., Jeffrey, S.R. (1998). Efficiency and technical progress in traditional and modern agriculture: evidence from rice production in China, Journal of Agricultural Economics, 18:157-165. DOI: 10.1016/S0169-5150(98)80004-2.
Aigner, D.J., Chu, S.F. (1968). On Estimating the Industry Production Function. American Economic Review, 58(4), 826–39. http://www.jstor.org/stable/1815535.
Aigner, D.J., Lovell, C.A.K., Schmidt, P.J. (1977). Formulation and estimation of stochastic frontier production function models. Journal of Econometrics, 6, 21–37. DOI: 10.1016/0304-4076(77)90052-5.
Akcay, Y. and Esengun, K. (1999). The Efficiency of Resource Allocation and Productivity in the Agricultural Farms in Kazova Region of Tokat Province, Turkish Journal of Agriculture and Forestry, 23, 831-842.
Akder, H., Kasnakoglu, H., Cakmak, E.H. (2000). Turkey: Sources of Growth in Turkish Agriculture, in Turkey: Country Economic Memorandum, Structural Reforms for Sustainable Growth, Background Papers, World Bank, Washington, DC.
Battese, G.E., Coelli, T.J. (1992). Frontier Production Functions, Technical Efficiency and Panel Data: With Application to Paddy Farmers in India. Journal of Productivity Analysis, 3(1–2), 153–169. DOI: 10.1007/BF00158774.
Battese, G.E., Coelli, T.J. (1995). A model for technical inefficiency effects in a stochastic frontier production function for panel data. Journal of Empirical Economics, 20(2), 325–332. DOI: 10.1007/BF01205442.
Batesse, G.E., Rao, D.S.P., O'Donnell, C.J. (2004). A Metafrontier Production Function for Estimation of technical Efficiencies and Technology gaps for Firms Operating Under Different Technologies, Journal of Productivity Analysis, 21, 91-103. DOI: 10.1023/B:PROD.0000012454.06094.29.
Batesse, G.E., Broca S.S. (1997). Functional Forms of Stochastic Frontier Production Functions and Models for Technical Inefficiency Effects: A comperative Study for Wheat Farmers in Pakistan, Journal of Productivity Analysis, 8, 395–414. DOI: 10.1023/A:1007736025686.
Battese, G.E., Coelli, T.J., (1993). A stochastic frontier production function incorporating a model of technical inefficiency effects. Working Papers in Econometrics and Applied Statistics vol. 69, Department of Econometrics, University of New England, Armidale.
Battese, G.E., Corra, G. (1977). Estimation of a Production Frontier Model with Application to the Pastoral Zone of Easter Australia. Australian Journal of Agricultural Economics, 21(3), 167–179. DOI: 10.1111/j.1467-8489.1977.tb00204.x.
Chavas, J.P., Petrie R., Roth, M. (2005). Farm Household Production Efficiency: Evidence From the Gambia, American Journal of Agricultural Economics, 87(1), 160-179. DOI: 10.1111/j.0002-9092.2005.00709.x.
Coelli, Rahman and Thirtle (2003). A Stochastic frontier approach to total factor productivity measurement in Bangladesh crop agriculture 1961-92, Journal of International Development, 15, 321-333. DOI: 10.1002/jid.975.
Cornwell, C., Schmidt, P., Sickles, R.C. (1990). Production Frontiers with Cross- Sectional and Time-Series Variations in Efficiency Levels. Journal of Econometrics, 46(1/2), 185–200. DOI: 10.1016/0304-4076(90)90054-W.
Cakmak, E.H. (2004). Structural Change and Market Opening in Turkish Agriculture, Paper presented in "Seminaire Analyse comparee des relations agricoles en libre-echange Nord-Sud" Monpellier.
Cakmak, E.H., Akder, H. (2005). DTO ve AB'deki Gelismeler Isiginda 21. Yuzyilda Turkiye Tarimi, (in Turkish), TUSIAD-T/2005-06/397, July, Istanbul: Lebib Yalkim Yayinevi.
Cakmak, E.H., Dudu, H., Ocal, N. (2008). Turk Tarim Sektorunde Etkinlik: Yontem ve Hanehalki Duzeyinde Nicel Analiz [Efficiency in Turkish Agricultural Sector: Method and Farm Household Level Quantitative Analysis], (in Turkish) TEPAV Yayinlari: Ankara. available at http://goo.gl/qIn4A.
Cakmak, E.H., Tozanli, S. Dudu, H. Kirisci E.N. (2004). Characterization of Agricultural And Agro-Industrial Sectors in Turkey, Report for the Project "Impacts of agricultural trade liberalization Between the EU and Mediterranean Countries" supported by Framework Program 6 of European Union, http://eumed-agpol.iamm.fr/doc/reports/turquie_d3.pdf.
Cakmak, E.H., Zaim, O. (1998). Labor and Land Productivity in Turkish Agriculture, in Employment in Agriculture Study, ed. Tümay Bulutay, Ankara: State Institute of Statistics Publications.
Dudu, H. (2006). Efficiency in Turkish Agriculture: A Farm Household Level Analysis, Middle East Technical University, Department of Economics, unpublished M.Sc. Thesis.
Fare, R., Grosskopf, S., Lovell, C.A.K. (1985). The Measurement of Efficiency of Production, Kluver-Nijhoff Publishing, Boston. DOI: 10.1007/978-94-015-7721-2.
Farrell, M.J. (1957). The Measurement of Productive Efficiency, Journal of Royal Statistical Society, Series A, General. 120, Part 3, 253-281. DOI: 10.2307/2343100.
G&G Consulting, Baskent Unv. Development Foundation, TNS Siar JV (2003). Agricultural Reform Implementation Project Quantitative Household Survey Final Report.
G&G Consulting, Baskent Unv. Development Foundation, TNS Siar JV (2005). Agricultural Reform Implementation Project Quantitative Household Survey Final Report.
Gabrielsen, A. (1975). On Estimating Efficient Production Functions. Working Paper, no A-35, Chr. Michelsen Institute, Department of Humanities and Social Sciences, Bergen, Norway.
Greene, W.M. (1980). Maximum likelihood Estimation of Econometric Frontier Functions. Journal of Econometrics, 13(1), 27–56. DOI: 10.1016/0304-4076(80)90041-X.
Kepenek, Y., Yenturk, N. (2001). Turkiye Ekonomisi, 12th ed. Istanbul: Remzi Kitabevi.
Kumbhakar, S.C. (1990). Production Frontiers, Panel Data and Time-Varying Technical Inefficiency. Journal of Econometrics, 46(1/2), 201–211. DOI: 10.1016/0304-4076(90)90055-X.
Kumbhakar, S.C., Lovell, C.A.K. (2000). Stochastic Frontier Analysis, Cambridge University Press, Cambridge. DOI: 10.1017/CBO9781139174411
Lundell, M., Lampietti, J., Pertev, R., Pohlmeier, L., Akder, H., Ocek, E., Jha, S. (2004). Turkey: A Review of the Impact of The Reform of Agricultural Sector Subsidization. World Bank: Washington, D.C.
Meeusen, W., Van den Broeck, J. (1977). Efficiency Estimation from Cobb-Douglas production functions with composed error. International Economic Review, 18, 435–444. DOI: 10.2307/2525757.
Murillo-Zamarano, L.R. (2004). Economic Efficiency and Frontier Techniques, Journal of Economic Surveys, 18(1), 33-77. DOI: 10.1111/j.1467-6419.2004.00215.x.
Ozkan, B. Akcaoz, H., Fert, C. (2004). Energy input-output Analysis in Turkish Agriculture, Renewable Energy, 29, 39-5. DOI: 10.1016/S0960-1481(03)00135-6.
Pitt, M.M., Lee, L.F. (1981). The Measurement and Sources of Technical Inefficiency in the Indonesian Weaving Industry, Journal of Development Economics, 9, 43–64. DOI: 10.1016/0304-3878(81)90004-3.
Richmond, J. (1974). Estimating the Efficiency of Production. International Economic Review, 15, 515–521. DOI: 10.2307/2525875.
Schmidt, P., Sickles, R.C. (1984). Production Frontiers and Panel Data. Journal of Business and Economic Statistics, 2, 299–326. DOI: 10.1080/07350015.1987.10509583.
Mahmud, S.F., Demir, N. (2003). Agro-Climatic Conditions and Regional Inefficiencies in Agriculture, Canadian Journal of Agricultural Economics, 50, 269-280. DOI: 10.1111/j.1744-7976.2002.tb00337.x.
Mahmud, S.F., Demir, N.(1999). Regional Technical Efficiency Differentials in the Turkish Agriculture: A Note, Indian Economic Review, 33, 197-206.
Toksoy, D., Ayyildiz, H. (2004). Measuring the Marketing Performances of State Nurseries in Turkey: Examples of Eastern Anatolia and Black Sea Region Nurseries, Turkish Journal of Agriculture and Forestry, 28, 443-456.
Uzunlu, V., Bayaner, A. , Beniwal, P.S. (1999). Problem Identification and Priority Setting in Agricultural Research: The Case of The Eastern Margin of Central Anatolia, Turkish Journal of Agriculture and Forestry, 23, 679-686.
Xu, X., Jeffrey, S.R. (1998). Efficiency and technical progress in traditional and modern agriculture: evidence from rice production in China, Journal of Agricultural Economics, 18:157-165. DOI: 10.1016/S0169-5150(98)80004-2.