Abstract
Resource use efficiency is an important goal for UK agricultural policy and it is crucial to understanding policy debates concerning food security, environmental improvement and climate change, as it underlines resource use and wastage within a particular system.
An aspect of efficient resource use is technical efficiency, which can be defined as a situation where it is impossible for a firm to produce, with the given know-how, (1) a larger output from the same inputs or (2) the same output with less of one or more inputs without increasing the amount of other inputs. In practice, the interest is on the relative position in terms of efficiency of a particular firm with respect to others. Therefore, technical efficiency is characterised by the relationship between observed production and some ideal or potential
production (Greene, 1993).
The modeling and estimation of technical efficiency of a farm relative to other has become an important area of economic study. The stochastic production frontier (SPF) technique has proven to be the most popular approach for agricultural economists to measure individual farm technical efficiencies. This is because it allows separation of the inefficiency in the production from random problems which are prevalent in agriculture such as disease and weather.
This report represents the main output of the Defra funded project ‘A report on agricultural efficiency at the farm level’ (RMP/5503) which applies these methods to measure technical efficiency at various regional scales. The overall objective of this research is:
1. To make comparisons of efficiency across farm types and geographies.
2. To identify the characteristics of farms on the efficient frontier.
An aspect of efficient resource use is technical efficiency, which can be defined as a situation where it is impossible for a firm to produce, with the given know-how, (1) a larger output from the same inputs or (2) the same output with less of one or more inputs without increasing the amount of other inputs. In practice, the interest is on the relative position in terms of efficiency of a particular firm with respect to others. Therefore, technical efficiency is characterised by the relationship between observed production and some ideal or potential
production (Greene, 1993).
The modeling and estimation of technical efficiency of a farm relative to other has become an important area of economic study. The stochastic production frontier (SPF) technique has proven to be the most popular approach for agricultural economists to measure individual farm technical efficiencies. This is because it allows separation of the inefficiency in the production from random problems which are prevalent in agriculture such as disease and weather.
This report represents the main output of the Defra funded project ‘A report on agricultural efficiency at the farm level’ (RMP/5503) which applies these methods to measure technical efficiency at various regional scales. The overall objective of this research is:
1. To make comparisons of efficiency across farm types and geographies.
2. To identify the characteristics of farms on the efficient frontier.
| Original language | English |
|---|---|
| Commissioning body | UK Department for Environment, Food and Rural Affairs |
| Number of pages | 87 |
| Publication status | Print publication - 1 Jun 2010 |
Rural Policy Centre Themes
- Rural economies and communities
