[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v34y2018i2p426-440.html
   My bibliography  Save this article

Contract farming and technical efficiency: Evidence from low†value and high†value crops in Nepal

Author

Listed:
  • Ashok K. Mishra
  • Saleem Shaik
  • Aditya R. Khanal
  • Subir Bairagi
Abstract
Contract farming (CF), an institutional innovation, can reduce transaction costs and solve market imperfections in many developing countries. This study compares productivity and technical efficiency (TE) of contract and independent producers of high yielding variety (HYV) paddy seed (a low†value crop) and ginger (a high†value crop) producers in a sample of smallholders in Nepal. We address the self†selection into CF by using propensity score matching and translog stochastic frontier function to estimate our empirical model. Using farm†level data from Nepal, our findings show that CF increased the average TE levels of HYV paddy seed producers from 87% to 94% and the average TE levels of ginger producers from 89% to 97%. Finally, we find that human capital and distance to the market increases the technical inefficiency of low†value crop smallholders in Nepal. [EconLit citations: C21, O13, Q12].

Suggested Citation

  • Ashok K. Mishra & Saleem Shaik & Aditya R. Khanal & Subir Bairagi, 2018. "Contract farming and technical efficiency: Evidence from low†value and high†value crops in Nepal," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 426-440, March.
    • Handle: RePEc:wly:agribz:v:34:y:2018:i:2:p:426-440
    DOI: 10.1002/agr.21533
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/agr.21533
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.21533?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bravo-Ureta, Boris E. & Evenson, Robert E., 1994. "Efficiency in agricultural production: The case of peasant farmers in eastern Paraguay," Agricultural Economics, Blackwell, vol. 10(1), pages 27-37, January.
    2. Thomas Reardon & Kostas Stamoulis & Prabhu Pingali, 2007. "Rural nonfarm employment in developing countries in an era of globalization," Agricultural Economics, International Association of Agricultural Economists, vol. 37(s1), pages 173-183, December.
    3. Marc F. Bellemare & Lindsey Novak, 2017. "Contract Farming and Food Security," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 357-378.
    4. Masakure, Oliver & Henson, Spencer, 2005. "Why do small-scale producers choose to produce under contract? Lessons from nontraditional vegetable exports from Zimbabwe," World Development, Elsevier, vol. 33(10), pages 1721-1733, October.
    5. Kumbhakar, Subal C & Bhattacharyya, Arunava, 1992. "Price Distortions and Resource-Use Efficiency in Indian Agriculture: A Restricted Profit Function Approach," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 231-239, May.
    6. Lockheed, Marlaine E & Jamison, Dean T & Lau, Lawrence J, 1980. "Farmer Education and Farm Efficiency: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 29(1), pages 37-76, October.
    7. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
    8. Zavale, Helder & Mabaya, Edward T. & Christy, Ralph D., 2005. "Smallholders’ Cost Efficiency in Mozambique: Implications for Improved Maize Seed Adoption," Staff Papers 121066, Cornell University, Department of Applied Economics and Management.
    9. Wang, Sun Ling & Heisey, Paul & Schimmelpfennig, David & Ball, Eldon, 2015. "Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers," Economic Research Report 207954, United States Department of Agriculture, Economic Research Service.
    10. Abdulai, Awudu & Eberlin, Richard, 2001. "Technical efficiency during economic reform in Nicaragua: evidence from farm household survey data," Economic Systems, Elsevier, vol. 25(2), pages 113-125, June.
    11. Tim Coelli & Sanzidur Rahman & Colin Thirtle, 2002. "Technical, Allocative, Cost and Scale Efficiencies in Bangladesh Rice Cultivation: A Non‐parametric Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 607-626, November.
    12. Abdulai, Awudu & Huffman, Wallace, 2000. "Structural Adjustment and Economic Efficiency of Rice Farmers in Northern Ghana," Economic Development and Cultural Change, University of Chicago Press, vol. 48(3), pages 503-520, April.
    13. Wang, Jirong & Cramer, Gail L. & Wailes, Eric J., 1996. "Production efficiency of Chinese agriculture: evidence from rural household survey data," Agricultural Economics, Blackwell, vol. 15(1), pages 17-28, September.
    14. Uematsu, Hiroki & Mishra, Ashok K., 2012. "Organic farmers or conventional farmers: Where's the money?," Ecological Economics, Elsevier, vol. 78(C), pages 55-62.
    15. Rajeev H. Dehejia & Sadek Wahba, 2002. "Propensity Score-Matching Methods For Nonexperimental Causal Studies," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 151-161, February.
    16. Maredia, Mywish K. & Howard, Julie A., 1998. "Facilitating Seed Sector Transformation in Africa: Key Findings from the Literature," Food Security International Development Policy Syntheses 11366, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    17. George E. Battese & Sohail J. Malik & Manzoor A. Gill, 1996. "An Investigation Of Technical Inefficiencies Of Production Of Wheat Farmers In Four Districts Of Pakistan," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 37-49, January.
    18. Paul Winters & Phil Simmons & Ian Patrick, 2005. "Evaluation of a Hybrid Seed Contract between Smallholders and a Multinational Company in East Java, Indonesia," Journal of Development Studies, Taylor & Francis Journals, vol. 41(1), pages 62-89.
    19. Bozoglu, Mehmet & Ceyhan, Vedat, 2007. "Measuring the technical efficiency and exploring the inefficiency determinants of vegetable farms in Samsun province, Turkey," Agricultural Systems, Elsevier, vol. 94(3), pages 649-656, June.
    20. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    21. Abdul Wadud & Ben White, 2000. "Farm household efficiency in Bangladesh: a comparison of stochastic frontier and DEA methods," Applied Economics, Taylor & Francis Journals, vol. 32(13), pages 1665-1673.
    22. Barrett, C. B. & Reardon, T. & Webb, P., 2001. "Nonfarm income diversification and household livelihood strategies in rural Africa: concepts, dynamics, and policy implications," Food Policy, Elsevier, vol. 26(4), pages 315-331, August.
    23. Mubarik Ali & John C. Flinn, 1989. "Profit Efficiency Among Basmati Rice Producers in Pakistan Punjab," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 303-310.
    24. Carlos D. Mayen & Joseph V. Balagtas & Corinne E. Alexander, 2010. "Technology Adoption and Technical Efficiency: Organic and Conventional Dairy Farms in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 181-195.
    25. Guido W. Imbens, 2004. "Nonparametric Estimation of Average Treatment Effects Under Exogeneity: A Review," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 4-29, February.
    26. Tzouvelekas, Vangelis & Pantzios, Christos J. & Fotopoulos, Christos, 2001. "Technical efficiency of alternative farming systems: the case of Greek organic and conventional olive-growing farms," Food Policy, Elsevier, vol. 26(6), pages 549-569, December.
    27. Phil Simmons & Paul Winters & Ian Patrick, 2005. "An analysis of contract farming in East Java, Bali, and Lombok, Indonesia," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 513-525, November.
    28. Najma Sharif & Atul Dar, 1996. "An empirical study of the patterns and sources of technical inefficiency in traditional and HYV rice cultivation in Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 32(4), pages 612-629.
    29. Keijiro Otsuka & Yuko Nakano & Kazushi Takahashi, 2016. "Contract Farming in Developed and Developing Countries," Annual Review of Resource Economics, Annual Reviews, vol. 8(1), pages 353-376, October.
    30. Binam, Joachim Nyemeck & Tonye, Jean & wandji, Njankoua & Nyambi, Gwendoline & Akoa, Mireille, 2004. "Factors affecting the technical efficiency among smallholder farmers in the slash and burn agriculture zone of Cameroon," Food Policy, Elsevier, vol. 29(5), pages 531-545, October.
    31. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    32. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    33. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    34. Sharma, Khem R. & Leung, PingSun & Zaleski, Halina M., 1999. "Technical, allocative and economic efficiencies in swine production in Hawaii: a comparison of parametric and nonparametric approaches," Agricultural Economics, Blackwell, vol. 20(1), pages 23-35, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Maristela M. Martins & Humberto F. S. Spolador & Eric Njuki, 2022. "Production environment and managerial techniques in explaining productivity growth in Brazilian beef cattle production," Agribusiness, John Wiley & Sons, Ltd., vol. 38(2), pages 371-385, April.
    2. Khanal, Aditya R. & Mishra, Ashok K., 2018. "Impacts of contract farming decisions on high value crop production of smallholder Nepalese farmers: A multinomial endogenous switching regression approach," 2018 Annual Meeting, August 5-7, Washington, D.C. 274366, Agricultural and Applied Economics Association.
    3. Temesgen Gelata, Fikiru & Han, Jiqin & Kipkogei Limo, Shadrack, 2024. "Impact of dairy contract farming adoption on household resilience to food insecurity evidence from Ethiopia," World Development Perspectives, Elsevier, vol. 33(C).
    4. Neubauer, Florian & Songsermsawas, Tisorn & Kámiche-Zegarra, Joanna & Bravo-Ureta, Boris E., 2022. "Technical efficiency and technological gaps correcting for selectivity bias: Insights from a value chain project in Nepal," Food Policy, Elsevier, vol. 112(C).
    5. Bairagi, Subir K. & Mishra, Ashok K., 2020. "Do Farmers’ Organizations Impact Production Efficiency? Evidence from Bangladeshi Rice Farmers," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304179, Agricultural and Applied Economics Association.
    6. BEHERA, Deepak Kumar & SWAIN, Braja Bandhu, 2021. "Coperative-Led Contract Farming On Farm Productivity In India," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 21(1), pages 49-58.
    7. Kashi Kafle & Tisorn Songsermsawas & Paul Winters, 2022. "Agricultural value chain development in Nepal: Understanding mechanisms for poverty reduction," Agricultural Economics, International Association of Agricultural Economists, vol. 53(3), pages 356-373, May.
    8. Mai Chiem Tuyen & Prapinwadee Sirisupluxana & Isriya Bunyasiri & Pham Xuan Hung, 2022. "Stakeholders’ Preferences towards Contract Attributes: Evidence from Rice Production in Vietnam," Sustainability, MDPI, vol. 14(6), pages 1-21, March.
    9. Thomas Kopp & Ashok K. Mishra, 2022. "Perishability and market power in Nepalese food crop production," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 518-540, June.
    10. Kafle, Kashi & Songsermsawas, Tisorn & Winters, Paul, 2021. "IFAD Research Series Issue 65 - Impacts of agricultural value chain development in a mountainous region: Evidence from Nepal," IFAD Research Series 311008, International Fund for Agricultural Development (IFAD).
    11. Ashok K. Mishra & Mike G. Tsionas, 2020. "A Minimax Regret Approach to Decision Making Under Uncertainty," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 698-718, September.
    12. Zheng, Hongyun & Ma, Wanglin & Wang, Fang & Li, Gucheng, 2021. "Does internet use improve technical efficiency of banana production in China? Evidence from a selectivity-corrected analysis," Food Policy, Elsevier, vol. 102(C).
    13. Mai Chiem Tuyen & Prapinwadee Sirisupluxana & Isriya Bunyasiri & Pham Xuan Hung, 2022. "Perceptions, Problems and Prospects of Contract Farming: Insights from Rice Production in Vietnam," Sustainability, MDPI, vol. 14(19), pages 1-22, September.
    14. Kafle, Kashi & Songsermsawas, T. & Winters, P., 2021. "Impacts of agricultural value chain development in a mountainous region: evidence from Nepal," IWMI Books, Reports H050432, International Water Management Institute.
    15. Bellemare, Marc F. & Lee, Yu Na & Novak, Lindsey, 2021. "Contract farming as partial insurance," World Development, Elsevier, vol. 140(C).
    16. Fanny Widadie & Jos Bijman & Jacques Trienekens, 2021. "Farmer preferences in contracting with modern retail in Indonesia: A choice experiment," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 371-392, April.
    17. Wanglin Ma & Awal Abdul‐Rahaman & Gazali Issahaku, 2023. "Welfare implications of participating in agri‐value chains among vegetable farmers in Northern Ghana," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 793-811, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zahidul Islam, K.M. & Sumelius, John & Bäckman, Stefan, 2012. "Do differences in technical efficiency explain the adoption rate of HYV rice? Evidence from Bangladesh," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 13(1), pages 1-18.
    2. Boris Bravo-Ureta & Daniel Solís & Víctor Moreira López & José Maripani & Abdourahmane Thiam & Teodoro Rivas, 2007. "Technical efficiency in farming: a meta-regression analysis," Journal of Productivity Analysis, Springer, vol. 27(1), pages 57-72, February.
    3. Rahman, Sanzidur, 2003. "Profit efficiency among Bangladeshi rice farmers," Food Policy, Elsevier, vol. 28(5-6), pages 487-503.
    4. Bozoglu, Mehmet & Ceyhan, Vedat, 2007. "Measuring the technical efficiency and exploring the inefficiency determinants of vegetable farms in Samsun province, Turkey," Agricultural Systems, Elsevier, vol. 94(3), pages 649-656, June.
    5. Mottaleb, Khandoker & Khanal, Aditya R. & Mishra, Ashok & Mohanty, Samrendu, 2014. "Rice Farmers’ Production Efficiency under Abiotic Stresses: the Case of Bangladesh," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162543, Southern Agricultural Economics Association.
    6. Abdul Wadud, 2013. "Impact of Microcredit on Agricultural Farm Performance and Food Security in Bangladesh," Working Papers 14, Institute of Microfinance (InM).
    7. Saldias, Rodrigo & von Cramon-Taubadel, Stephan, 2012. "Access to credit and the determinants of technical inefficiency among specialized small farmers in Chile," DARE Discussion Papers 1211, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    8. Nguyen To-The & Tuan Nguyen-Anh, 2021. "Impact of government intervention to maize efficiency at farmer’s level across time: a robust evidence in Northern Vietnam," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(2), pages 2038-2061, February.
    9. Mishra, Ashok K. & Kumar, Anjani & Joshi, Pramod K. & D'souza, Alwin, 2016. "Impact of contracts in high yielding varieties seed production on profits and yield: The case of Nepal," Food Policy, Elsevier, vol. 62(C), pages 110-121.
    10. Jara-Rojas, Roberto & Bravo-Ureta, Boris E. & Moreira, Victor H. & Diaz, Jose, 2012. "Natural Resource Conservation and Technical Efficiency from Small-scale Farmers in Central Chile," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126227, International Association of Agricultural Economists.
    11. Sanzidur Rahman, 2010. "Women’s Labour Contribution to Productivity and Efficiency in Agriculture: Empirical Evidence From Bangladesh," Journal of Agricultural Economics, Wiley Blackwell, vol. 61(2), pages 318-342, June.
    12. Wollni, Meike & Brümmer, Bernhard, 2012. "Productive efficiency of specialty and conventional coffee farmers in Costa Rica: Accounting for technological heterogeneity and self-selection," Food Policy, Elsevier, vol. 37(1), pages 67-76.
    13. Anik, Asif Reza & Bauer, Siegfried, 2015. "Impact of resource ownership and input market access on Bangladeshi paddy growers’ efficiency," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 4(3), April.
    14. Amer Ait Sidhoum & K Hervé Dakpo & Laure Latruffe, 2022. "Trade-offs between economic, environmental and social sustainability on farms using a latent class frontier efficiency model: Evidence for Spanish crop farms," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-17, January.
    15. Villano, Renato A. & Fleming, Euan M., 2004. "Analysis of Technical Efficiency in a Rainfed Lowland Rice Environment in Central Luzon Philippines Using a Stochastic Frontier Production Function with a Heteroskedastic Error Structure," Working Papers 12906, University of New England, School of Economics.
    16. Tim J. Coelli, 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 39(3), pages 219-245, December.
    17. Álvaro Ramírez Suárez, 2013. "Análisis de eficiencia económica de fincas arroceras: una aplicación de una función determinística de ingresos brutos frontera," Revista Lebret, Universidad Santo Tomás - Bucaramanga, vol. 5, pages 213-240, December.
    18. Bac Ho & Teruaki Nanseki & Yosuke Chomei, 2019. "Profit efficiency of tea farmers: case study of safe and conventional farms in Northern Vietnam," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 21(4), pages 1695-1713, August.
    19. Renato Villano & Euan Fleming, 2006. "Technical Inefficiency and Production Risk in Rice Farming: Evidence from Central Luzon Philippines," Asian Economic Journal, East Asian Economic Association, vol. 20(1), pages 29-46, March.
    20. Álvaro Ramírez Suárez, 2013. "Análisis de eficiencia económica de fincas arroceras: una aplicación de una función determinística de ingresos brutos frontera," Revista Lebret, Universidad Santo Tomás - Bucaramanga, vol. 5, pages 213-240, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:34:y:2018:i:2:p:426-440. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.