Assessing Farm Efficiency Through Quantities or Revenues and Costs: Does It Matter?

Abstract

We examined the effect of using input and output quantities as compared with costs and revenues when estimating farm-level efficiency scores and ranking. We used farm-level data from the 2015 Ethiopia Rural Socioeconomic Survey (ERSS) where production inputs and outputs in quantities as well as monetary units could be distinguished. Average technical efficiency scores of 72.2% and 68.6%, respectively, were found for analysis based on quantities and on costs and revenues. Efficiency ranking differed significantly. Results suggest that type of data compilation introduces bias to the efficiency assessment and that conclusions may be unclear, which complicates policy advice.

Keywords

accounting data; data envelopment analysis; output; production factors; technical efficiency; D24; Q12

Published in

Journal of Agricultural and Applied Economics
2023, volume: 55, number: 3, pages: 551-565

SLU Authors

• Tirkaso, Wondmagegn Tafesse

  • Department of Economics, Swedish University of Agricultural Sciences
    

• Hansson, Helena

  • Department of Economics, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Business Administration

Publication identifier

• DOI: https://doi.org/10.1017/aae.2023.30

Permanent link to this page (URI)

https://res.slu.se/id/publ/127390