Returns to Scale and Technical Efficiency in Colombian Coffee Production: Implications for Colombia’s Agricultural and Land Policies

Abstract

This paper applies a parametric approach to estimate technical and scale (in)efficiencies using input and output data at the level of 850 individual Colombian coffee-farms. Different Stochastic Production Frontier functions are estimated using a twostep procedure that corrects the endogeneity that has been ignored in previous works, leading to more reliable (i.e. unbiased and consistent) results. We conclude that small and medium coffee farmers are technically inefficient and exhibit increasing returns to scale, whereas large coffee farmers are close to being quasi-technically efficient and exhibit decreasing returns to scale. The corrected-for-endogeneity estimation also indicates that small and medium-sized units must prioritise primarily the land factor, whereas large farms should concentrate their efforts on increasing the labour factor. Based on these results, several agricultural and land policy recommendations are made.

Comparing Technical and Allocative Efficiency between Family Farms and Agricultural Corporations: Evidence From Japan’s Rice Sector

“…This implies that the former is more adept in flexibly adjusting the input of production factors, thus making its production efficiency higher than the latter. More importantly, taken together with the finding from the existing literature that operation size has an extremely significant effect on production efficiency (Fujie and Senda, 2022;Perdomo et al, 2022), this paper focuses on estimating and comparing production efficiency between family farms and agricultural corporations of the same operation size to verify whether agricultural corporations are superior to family farms in terms of production efficiency.…”

“…The present paper identifies and compares the technical and allocative efficiency of family farms and agricultural corporations by estimating a stochastic production frontier model. Stochastic frontier models have been widely applied in the analyses of the efficiency of agricultural production (Aigner et al, 1977;Battese and Coelli, 1992;Battese and Coelli, 1995;Meeusen and Julien 1977;Perdomo et al, 2022;Zhang et al, 2019).…”