Semi-parametric analysis of agricultural production under dichotomy of inputs

Abstract

Inputs used in agriculture play asymmetric roles during the production process. Growth inputs, i.e. water, nutrients, seed and soil environment, become a part of the biological growth of plants, whereas facilitating inputs, i.e. labour, capital and pesticides, help regulate the functions of growth inputs from outside of the plants. This insight about the asymmetric role of agricultural inputs has been incorporated into agricultural economics on the basis of agronomic principles of crop production. The objective of this study was to analyse the effect of facilitating inputs on the technical efficiency of growth inputs. This analysis has been carried out semi-parametrically by employing the double bootstrap procedure on farm household level data from Pakistan. The results indicate that pesticides, capital and family labour scale up the technical efficiency of the growth inputs, whereas hired labour significantly scales down this efficiency. We recommend the creation of alternative employment opportunities for the rural labour force, provision of effective agricultural extension services to farm families, a minimisation of trade barriers to the import agricultural machinery and an enhancement of the extent of farm mechanisation.