Does higher market power necessarily reduce efficiency? Evidence from Chinese rice processing enterprises

This study evaluates the market power and cost efficiency of China’s rice processing firms through a stochastic frontier cost function. The effect of market power on cost efficiency is tested using the two-stage ordinary least squares method and a Hausman-Taylor type instrumental variable. On average, firms in the industry have weak market power but high cost efficiency, which has been declining since the 2008 global financial crisis. Firms with stronger market power exhibit higher cost efficiency, contradicting the quiet life hypothesis. This effect is more significant for firms with weaker market power after the global financial crisis. The enhancement of market power may help save resources for improving management and efficiency for Chinese rice processing industry.

A Comparison of Economic Efficiency of Monoculture and Multiple Cropping Patterns: The Case of Cassava Farming in Ende, Indonesia

<span lang="EN-US">Nuabosi cassava is an alternative carbohydrate source for the community, which is expected to be a substitute for rice. This commodity has the potential to be developed, but is limited in resources, so it requires technological breakthroughs. This study aims at analyzing the level of technical, allocative and economic efficiency between the cassava cropping pattern and the factors that affect the efficiency. The research was conducted in Randotonda Village, from November 2019 to January 2020 and the samples consisted of 61 monoculture farmers and 46 multiple cropping farmers. Data analysis was performed using the Cobb-Douglass stochastic frontier production function. The allocative and economic efficiency was examined with the stochastic frontier cost function approach. The results of stochastic frontier estimation show that all variables have a positive effect on the production variable. The variables having a positive effect on the total cost include the price of cassava cuttings, the price of fertilizer, production and the dummy cropping pattern. The average level of economic efficiency of monoculture farmers is lower than that of multiple cropping farmers. Factors that affect economic efficiency are age, length of time to cultivate, frequency of obtaining information, dummy of farmer group membership and dummy of cropping patterns. In short, the level of technical, allocative and economic efficiency of monoculture farmers is lower than that of multiple cropping farmers. Farmers are expected to pay attention to the types of plants that are suitable in implementing the multiple cropping pattern</span><span lang="IN">.</span>

PENGUKURAN EFISIENSI EKONOMI USAHATANI JAGUNG NGGELA (JAWA NGGELA) DI KABUPATEN ENDE

Economic Efficiency Measurement of Nggela Corn Farming (Jawa Nggela) at Ende Regency. This research aimed to: (1) analyze the economic efficiency level of Nggela corn farming and (2) analyze the factors which have an impact on economic efficiency. Data analysis use a production function approach and stochastic frontier cost function. The data analysis result shows that the seed price variable and fertilizer price give real effect at 99 % insignificance level, positive marked. Workers wage have no effect on production costs and negative marked. Production variables give a real effect at 99 % significance level. The average of Nggela corn farmers economic efficiency level is in the high category. The factors which have an effect on the economic efficiency of Nggela corn farming are; farmers age, duration of farming, frequency of getting information, members of farmer groups and the other income sources.

Allocative Efficiency of Maize Production in Chikun Local Government Area of Kaduna State, Nigeria

This study analyzed the allocative (cost) efficiency of maize production in Chikun Local Government Area of Kaduna State, Nigeria. Purposive and simple random sampling techniques were used to select 100 respondents. The data collected were analyzed using descriptive statistics and stochastic frontier cost function model. Results revealed that 87% of the respondents were males with 99% of the farmers in their working age group of between 21-60 years. Most (81%) of them were married with 52% of the maize farmers having household size of more than 5 people. Also, 52.0% had post primary school education. The results of the maximum likelihood estimate parameters of the stochastic frontier cost function revealed that cost of maize output, cost of labour, cost of fertilizers, cost of seeds and cost of transportation were significant at 1% level of probability. The allocative efficiency indices revealed that allocative efficiency of the sampled farmers ranged from 1.05 to 3.25 with a mean of 1.31, implying that an average farmer in the study area has costs that are about 31% above the minimum defined by the frontier. This shows that 31% of their costs are wasted compared to the best farmers producing the same maize output using the same technology. The study therefore recommends that adequate farm inputs should be provided at low cost to the farmers and adequate training should be given to the maize farmers in the area of minimizing their expenses on farm inputs in order to avoid cost wastage and become more efficient in allocation of their resources.

Market power, ownership and technical efficiency

Purpose The purpose of this paper is to estimate oligopsony power in the upstream factor market and oligopoly power in the downstream product market. On this basis, the paper intends to examine the effects of both oligopsony and oligopoly power as well as ownership on technical efficiency which were rarely discussed in previous studies. Design/methodology/approach First, based on the stochastic frontier production function, the paper constructs a new model that is capable to estimate oligopsony power for each observation. Second, the paper employs the popular dual stochastic frontier cost function to estimate marginal cost as well as oligopoly power. Then, the system GMM method with different sets of instrumental variables is applied to test the effects of the two-sided market power and ownership on technical efficiency. Findings Using unbalanced panel data at the firm level, the paper demonstrates that oligopsony power is significantly variant across different sectors. The most notable point is that oligopsony power in China’s soya and peanut oil industries is negative, while that in pork and beef industries is much stronger than those in other industries. In addition, state-owned enterprises (SOEs) are found to be less technically efficient in most of the selected industries, while SOEs with higher oligopsony power tend to be more technically efficient than non-state-owned enterprises(NSOEs), which is consistent with the quiet life hypothesis. Originality/value This paper sheds light mainly on three aspects. First, it proposes a new model to estimate oligopsony power for each single firm. Second, it tests the effect of oligopsony power on technical efficiency. Third, it distinguishes the differential effect of oligopsony power on technical efficiency between SOEs and NSOEs.

MEASUREMENT OF ECONOMIC EFFICIENCY OF UPLAND RICE FARMING IN DIFFERENT LAND OWNERSHIP STATUS IN MAUSAMBI VILLAGE, MAUROLE SUB-DISTRICT, ENDE REGENCY

This research is to: (1) analyze the level of economic efficiency of upland rice farming in different land ownership status and (2) analyze the factors that influence the economic efficiency of upland rice farming in different land ownership status. The data analysis method used was the production function approach and stochastic frontier cost function. The analysis results show that seed and fertilizer price variables have a significant impact on the 99% significance level and are positive. Labor wage has no significant impact on production costs and is negative. Production variable has a significant impact on the 99% significance level. Landowner and farmhand dummy variables have a 99% significant level and are positive. It can be interpreted that the production costs in both the landowner and farmhand land ownership status are higher than in the pawn taker land ownership status. The average level of economic efficiency of the landowner is higher than the farmhand and pawn taker ownership status. Factors that influence the economic efficiency of upland rice farming include: age, duration of farming, frequency of obtaining information, membership of farmer groups, other sources of income, landowner dummy and farmhand dummy.

MEASUREMENT OF ECONOMIC EFFICIENCY OF UPLAND RICE FARMING IN DIFFERENT LAND OWNERSHIP STATUS IN MAUSAMBI VILLAGE, MAUROLE SUB-DISTRICT, ENDE REGENCY

ABSTRACTThis research is to: (1) analyze the level of economic efficiency of upland rice farming in different land ownership status and (2) analyze the factors that influence the economic efficiency of upland rice farming in different land ownership status. The data analysis method used was the production function approach and stochastic frontier cost function. The analysis results show that seed and fertilizer price variables have a significant impact on the 99% significance level and are positive. Labor wage has no significant impact on production costs and is negative. Production variable has a significant impact on the 99% significance level. Landowner and farmhand dummy variables have a 99% significant level and are positive. It can be interpreted that the production costs in both the landowner and farmhand land ownership status are higher than in the pawn taker land ownership status. The average level of economic efficiency of the landowner is higher than the farmhand and pawn taker ownership status. Factors that influence the economic efficiency of upland rice farming include: age, duration of farming, frequency of obtaining information, membership of farmer groups, other sources of income, landowner dummy and farmhand dummy. Keywords: Ende, Economic Efficiency, Upland Rice Farming.

Economic Efficiency of Sorghum and Millet Production for Small Scale Farmers in Traditional Rainfed, North Kordofan State, Sudan

The purpose of this study was to measure and analyse the economic efficiency, and to identify the main factor behind economic efficiency of sorghum and millet for small scale farmers in traditional rainfed sector in North Kordofan State. Primary data is collected using structured questionnaire for a sample of 205 farmers from four localities namely (Sheikan, Umrwaba, Elnuhoud, and Elkhowi). Stochastic frontier approach (cost function) was used to analyse economic efficiency and descriptive statistics were used to analyse socio-economic characteristics of farmers. The results of stochastic frontier cost function revealed that the estimated economic efficiency of the sorghum and millet farmers obtained was found the mean economic efficiency to be 39% and 15%, respectively. The economic efficiency is very weak, because most parameters and inefficiency effect factor found to be not significant, these determinants may give a clear picture of farmers that could be targeted in order to increase efficiency