Translog Normal - Half Normal Stochastic Frontier Production function–An
application to Turmeric Production

L. Mary Louis

doi:https://doi.org/10.14445/22315373/IJMTT-V16P513

International Journal of Mathematics Trends and Technology

Research Article | Open Access | Download PDF

Volume 16 | Number 2 | Year 2014 | Article Id. IJMTT-V16P513 | DOI : https://doi.org/10.14445/22315373/IJMTT-V16P513

Translog Normal - Half Normal Stochastic Frontier Production function–An application to Turmeric Production

L. Mary Louis

Citation :

L. Mary Louis, "Translog Normal - Half Normal Stochastic Frontier Production function–An application to Turmeric Production," International Journal of Mathematics Trends and Technology (IJMTT), vol. 16, no. 2, pp. 79-86, 2014. Crossref, https://doi.org/10.14445/22315373/IJMTT-V16P513

Abstract

The success of business at the farm level mainly depends on the Technical efficiency (TE) of the farm. There are evidences that several farms do not realize the full potential of technology due to factors such as their managerial skills and differences in production environments. The present study was undertaken to quantify and measure technical efficiency score of 180 turmeric farms from north western region of Tamil Nadu using Translog Normal Half-Normal Stochastic Frontier Model (TNHNSFM), to know variations in efficiency among the farms and to analyse the policy implications for improving the efficiency. The maximum estimated technical efficiency was 99.14 per cent while the minimum was 87.02 per cent. The strength of relationship that exists between the observed efficiency and technical efficiency was given by the correlation coefficient  0.587 OE r and the Chi-square value was 1.4386.The significant level of the parameter   1.84 resulted in the presence of technical inefficiency. Moreover, a greater part of the residual variation in output was associated with the variation in technical inefficiency rather than with measurement error. The estimate of   0.77 indicated that the difference between the observed output and frontier output was primarily due to the factors which were 77 percent under the control of farms.

Keywords

Stochastic Frontier Model, Translog production function, Productivity, Technical Efficiency

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