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ARS Home » Research » Publications at this Location » Publication #104834
Title: ESTIMATION AND DECOMPOSITION OF TECHNICAL EFFICIENCY FOR SUGARBEET FARMS

Author
item WU, SHUNXIANG - USDA ARS RSML
item DEVADOSS, STEPHEN - UNIVERSITY OF IDAHO
item Lu, Yao
item WITHERS, RUSSEL - UNIVERSITY OF IDAHO
item WALKER, DAVID - UNIVERSITY OF IDAHO

Submitted to: Agricultural Economics Review
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 12/10/2002
Publication Date: N/A
Citation: N/A

Interpretive Summary: The sugarbeet production requires a large investment. For continued financial success, producers have to enhance their production efficiency. An efficiency analysis would provide useful information to farm operators on possible sources of production inefficiency and help them make more informed production decisions. This study revealed a positive relationship between efficiency improvement and farm profits. More diversified farm operations may help to reduce over-utilization of some inputs, such as farm machinery. Improvement of technical efficiency in sugarbeet production would be beneficial not only to farm producers, but to landlords and sugarbeet processors because of the traditional contractual agreement on revenue or loss.

Technical Abstract: This study computes technical efficiency for Idaho sugarbeet farms and decomposes it into pure technical efficiency, scale efficiency, and congestion efficiency using nonparametric procedures. The results indicate the average efficiency is 0.88 with 45% of the farms in the sample exhibiting full efficiency. Improper scale operation and input overutilization are the major sources of inefficiency for remaining farms. Technical efficiency is independent of farm size, but correlated with profitability. A tobit model was used to examine the impacts of variables: farm size, specialization, tenancy position, hired labor, location, and managerial ability on efficiency. Inefficiency in sugarbeet production results in a shortfall of potential revenues not only for producers, but for landlords and processors.