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Off-farm work, technical efficiency, and rice production risk in Taiwan

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Publication date
09/09/2011
Number of Pages
10
Language:
English
Type of Publication:
Articles & Journals
Focus Region:
Asia and the Pacific
Focus Topic:
Agricultural Value Chains / Agri-Businesses
Commodity:
Crops
Author
Hung-Hao Chang, Fang-I Wen
Organization
International Association of Agricultural Economists

This article investigates the differences in yield production, production efficiency, and yield risk for farmers both with and without off-farm work. Using a nationwide survey of rice farmers in Taiwan, we estimate two stochastic production frontier models that accommodate technical inefficiency and production risk simultaneously for farmers both with and without off-farm work. The stochastic dominance criterion is then applied to compare the differences in the distributions of the estimated technical efficiency and yield risk between groups. The empirical results indicate that these two groups of farmers use resources in different ways, and off-farm work is not necessarily associated with lower technical efficiency. For farmers in the lower percentiles of the efficiency distribution, those with off-farm work are more efficient than their counterparts without off-farm work. In addition, farmers with off-farm work face higher production risk and this result is robust for the entire distribution.