Technical efficiency and environmental-technological gaps in wheat production in Kerman province of Iran

Abstract

This article reports on an analysis of technical efficiency and environment-technology gaps in wheat farming in Iran. A random sample of 676 farmers was selected from the province of Kerman in 2004. In this study, Kerman is divided into five regions based on climatic and geographical conditions. The province is situated in the south-eastern part of Iran and contains substantial variations in climate. The technical efficiency indices are computed using three approaches. First, a standard stochastic production frontier was employed using pooled cross-sectional data. Secondly, regional stochastic frontier production functions were estimated. Lastly, the metafrontier approach was used because production environments and technologies are expected to differ between the five regions. Use of this method enabled technical efficiency scores to be corrected by the coefficient of the environment-technology gap ratio (ETGR). Estimates of the frontier were obtained assuming a translog functional form. Results indicate that farms differ in technical efficiencies, ETGRs and the use they make of inputs. Mean ETGRs vary substantially between farms and across regions whereas mean technical efficiencies are reasonably similar across regions but differ in the extent of variation among farms within each region. A low ETGR for the north-western region is attributable to a lack of water resources, restricting the ability of farmers to benefit from improved varieties, and small-sized farms, which militate against mechanization embodying labor-saving technologies. The results do not lead to definitive policy prescriptions. But they do provide indicators of where farm-level research is likely to be most effective in closing the environment-technology gap, for example by enabling farmers to take greater advantage of the productivity-enhancing effects of improved technologies embodied in cropping machinery and irrigation facilities. The ability of farmers to alleviate the environmental constraints on wheat production is likely to vary across regions, and will depend on the nature of these constraints and the ability of researchers to design technologies suited to each region that will overcome them.