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Crop Diversification and Technical Efficiency in Afghanistan: Stochastic Frontier Analysis

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  • Hayatullah Ahmadzai
Abstract
Using Stochastic Frontier Analysis (SFA), this paper centered on analysing the impact of Crop Diversification (CD) on farm level technical efficiency in Afghanistan. Data from a household level survey conducted in 2013-2004 by the Central Statistic Organization (CSO) is used in the analysis. The results revealed that adoption of a diversified portfolio of crops by the farmers significantly improves technical efficiency. In addition, access to extension services, farm size, cattle, oxen and tractor ownership by the farm households, and regional variables were other important factors that significantly affect technical efficiency. It is evident from the results that the estimated technical efficiency indices from the preferred truncated normal distribution range from 1.5% to 99.29%, with a sample mean of 71.9%. The basic SFA model was investigated for potential endogeneity in crop diversification. Instrumental Variable (IV) method was employed to correct for endogeneity in crop diversification. The results of the IV estimation reveal that failing to account for endogeneity in the basic model leads to a downward bias which is consistent with attenuation bias (measurement error in CD implies that OLS coefficients are biased towards zero, so one would predict IV coefficients greater in absolute size). The results of crop diversification index showed the presence of a relatively low level of crop diversification. Maximum likelihood estimation of translog stochastic frontier model shows that land, labour, and other purchased inputs (fertilizer, seeds, pesticides usage) have positive impact on farm revenues. The results show an evidence of constant returns to scale.

Suggested Citation

  • Hayatullah Ahmadzai, 2017. "Crop Diversification and Technical Efficiency in Afghanistan: Stochastic Frontier Analysis," Discussion Papers 2017-04, University of Nottingham, CREDIT.
    • Handle: RePEc:not:notcre:17/04
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    References listed on IDEAS

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    4. Miani, Abdul Matin & Hamayoun, Habibullah & Hemat, Mahmood, 2022. "Qualitative Analysis of Strategies Affecting Sustainable Livelihoods in the Northern Villages of Andar District, Gazni Province, Afghanistan," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 10(2), April.
    5. Hayatullah Ahmadzai, 2018. "Factor market participation and tests for separability in Afghanistan," Discussion Papers 2018-10, University of Nottingham, CREDIT.
    6. Wirat Krasachat, 2023. "The Effect of Good Agricultural Practices on the Technical Efficiency of Chili Production in Thailand," Sustainability, MDPI, vol. 15(1), pages 1-25, January.
    7. Hayatullah Ahmadzai, 2022. "Hope for Change: Is Diversifying Production Portfolios an Ideal Strategy to Boost Farming Efficiency in Afghanistan?," Progress in Development Studies, , vol. 22(1), pages 7-31, January.
    8. Masaood Moahid & Keshav Lall Maharjan, 2020. "Factors Affecting Farmers’ Access to Formal and Informal Credit: Evidence from Rural Afghanistan," Sustainability, MDPI, vol. 12(3), pages 1-16, February.
    9. Agnieszka Kurdyś-Kujawska & Agnieszka Strzelecka & Danuta Zawadzka, 2021. "The Impact of Crop Diversification on the Economic Efficiency of Small Farms in Poland," Agriculture, MDPI, vol. 11(3), pages 1-21, March.
    10. Md Harun Or Rosid & Zhao Xuefeng & Sk Alamgir Hossain & Mohammad Raihanul Hasan & Md Reza Sultanuzzaman, 2021. "The Impact of GDP on Cross-Country Efficiency in Wealth Maximization: a Joint Analysis Through the Stochastic Frontier and Generalized Method of Moments," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 11(1), pages 1-6.
    11. Sengphachan Khounthikoumane & Jae Bong Chang & Yoonsuk Lee, 2021. "Profit Efficiency of Rice Farms in Wet-Season Lowlands in Champhone District, Savannakhet Province, Lao PDR," Agriculture, MDPI, vol. 11(7), pages 1-10, July.
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    Keywords

    Agricultural economics; Afghanistan; applied econometrics; technical efficiency; crop diversification;
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