Comparative Analysis of Stochastic Frontier Partially non-parametric and Stochastic Frontier Parametric Methods Case Study: Measuring Cost Efficiency in Wheat Production in Iran

Subject Areas : Environmental policy and management

Ebrahim Moradi ¹ , Mosayeb Pahlavani ² , Ahmad Akbari ³ , Hossain Mehrabi Bashrabadi ⁴

1 - Ph.D. Student, University of Sistan and Baluchestan, Iran
2 - Associate Professor, University of Sistan and Baluchestan, Iran
3 - Professor, University of Sistan and Baluchestan, Iran
4 - Professor, University of Bahonar Kerman, Iran

Received: 2015-08-23 Accepted : 2015-08-23 Published : 2013-06-01

Keywords: Iran, Cost efficiency, Partially Non- Parametric Method, Stochastic Frontier Method,

References:

Most research on performance evaluation of agricultural crops in Iran analyzes technical efficiency with estimation of stochastic production function. In this paper in spite of past research we survey cost efficiency with panel data. Information about input prices, yield and production cost per hectare collected for 28 provinces in 10 years and stochastic frontier cost function estimated with panel data in two methods, parametric stochastic frontier and partially non-parametric stochastic frontier. The results show that according to parameter significance and discretion of production structure parametric methodology is more suitable than non- parametric methodology.
Land rent (price) had maximum influence and chemical fertilizer price had minimum influence on frontier production cost per hectare. Cost efficiency of wheat production in Iran is suitable and over 90 percent. Surveyed period Khuzestan province had maximum cost efficiency and Yazd province had minimum cost efficiency in wheat production. In whatever province where efficiency is low, agricultural education and knowledge needed to improve further.