TY - JOUR
T1 - Estimating Technical Efficiency and Production Risk under Contract Farming
T2 - A Bayesian Estimation and Stochastic Dominance Methodology
AU - Mishra, Ashok K.
AU - Rezitis, Anthony N.
AU - Tsionas, Mike G.
N1 - Funding Information:
1Ashok K. Mishra holds the Kemper and Ethel Marley Foundation Chair in the Morrison School of Agribusiness, W. P. Carey School of Business, Arizona State University, Mesa, USA. Email: ashok.k.mishra@asu.edu for correspondence. Anthony N. Rezitis is a Professor in the Department of Agricultural Economics and Rural Development, Agricultural University of Athens, Athens, Greece. Mike Tsionas is a Professor in the Department of Economics, Lancaster University Management School, UK. The authors would like to thank David Harvey for excellent comments and suggestions. The authors would also like to thank Anjani Kumar, Research Fellow of IFPRI South Asia, for providing data used in this study. The data was collected under the Policy Reform Initiative Project in Nepal funded by the United States Agency for International Development (USAID). [Correction added on 23 November after first online publication: The acknowledgments section has been updated in this version]
Publisher Copyright:
© 2018 The Agricultural Economics Society
PY - 2019/6
Y1 - 2019/6
N2 - We investigate production risk, technical efficiency and risk attitudes amongst contract and independent farmers. We use a Bayesian parametric approach and stochastic dominance quantile regression methods to compare technical efficiency and risk attitude of smallholders in Nepal. Using farm-level data, we find that contract farmers appear to show lower inefficiency and lower production risk. Additionally, contract and independent farmers can increase output by reducing the scale of operation. Regardless of the commodity produced and farming arrangement (contract or independent production), we find that labour, land and other inputs are risk-augmenting, while the role of capital is mixed. We find a second order stochastic dominance (SSD) for lentils, and first order stochastic dominance (FSD) for tomatoes, ginger and HYV paddy seed commodities. Finally, contract farmers are more risk averse than independent farmers, regardless of the commodity produced.
AB - We investigate production risk, technical efficiency and risk attitudes amongst contract and independent farmers. We use a Bayesian parametric approach and stochastic dominance quantile regression methods to compare technical efficiency and risk attitude of smallholders in Nepal. Using farm-level data, we find that contract farmers appear to show lower inefficiency and lower production risk. Additionally, contract and independent farmers can increase output by reducing the scale of operation. Regardless of the commodity produced and farming arrangement (contract or independent production), we find that labour, land and other inputs are risk-augmenting, while the role of capital is mixed. We find a second order stochastic dominance (SSD) for lentils, and first order stochastic dominance (FSD) for tomatoes, ginger and HYV paddy seed commodities. Finally, contract farmers are more risk averse than independent farmers, regardless of the commodity produced.
KW - Bayesian
KW - Contract farming
KW - production risk
KW - risk attitudes
KW - stochastic dominance
KW - technical efficiency
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U2 - 10.1111/1477-9552.12291
DO - 10.1111/1477-9552.12291
M3 - Article
AN - SCOPUS:85054180518
SN - 0021-857X
VL - 70
SP - 353
EP - 371
JO - Journal of Agricultural Economics
JF - Journal of Agricultural Economics
IS - 2
ER -