Technical, Allocative and Economic Efficiencies of Potato Production in Iran

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1 Internatonal Journal of Farmng and Alled Scences Avalable onlne at IJFAS Journal /73-77/ 31 Jul, 2018 ISSN IJFAS Techncal, Allocatve and Economc Effcences of Potato Producton n Iran Al Shahnavaz Economc, Socal and Extenson Research Department, East Azarbajan Agrcultural and Natural Recourses Research and Educaton Center, AREEO, Tabrz, Iran Correspondng author: Al Shahnavaz ABSTRACT: In ths study techncal, allocaton and economc effcences of 22 potato producng provnces n Iran was nvestgated usng data envelopment analyss approach. The Results showed that average techncal, allocatve and economc effcences were 0.98, 0.77 and 0.75, respectvely. It was ndcated that t had been possble to reduce the producton cost by 25 percent The results dentfed that the consumpton of seed, manure, herbcdes, fungcdes, ntrogen, drect labor and water was more than the optmal economc amount and nsectcdes and potash were used less than optmum amount. The results clearly ndcated that the man problem n potato producton of Iran was resource allocaton, so by optmzng the nput usage, the proft margn could be ncreased. The optmum use of seed, manure, herbcdes, nsectcdes, fungcdes, phosphates, ntrogen, potash, drect labor was calculated kg, 3.6 ton, 0.7 kg, 1.1 kg, 0.5 kg, kg, 181 kg, 58 kg, 17 day-person and Rals, respectvely. It was expected that effcency mprovng could reduce potato producton cost about Rals almost 22 present per hectare. Keywords: Techncal Effcency, Economc Effcency, Optmal Allocaton, Producton Management INTRODUCTION The group of vegetables has a major share n Iranan agrcultural sector producton. In the perod of , 17 mllon ton of agrcultural producton s attrbuted to ths group and potato wth 5 mllon ton had 29 percent of total vegetable producton. Accordng to the avalable nformaton, hectare of agrcultural land n Iran s allocated to potato producton. Exstng data shows that there s a sgnfcant dfference n potato yeld n dfferent provnces of the country that vares from n Alborz provnce to ton per hectare n Kermanshah provnce (Jhad Agrculture Mnstry, 2016). In addton to the dfferences n yelds, how to allocate nputs to potato cultvaton n country provnces s not the same, So that the total producton cost fluctuates from (East Azerbajan) to (Hamedan) Rals (Jhad Agrculture Mnstry, 2017) per hectare. ths research has been carred out to study the ssue of producton effcency and consumpton of nputs n relaton to potato producton n Iran. Rafee et al. (2011) nvestgated the effcency of dary farms n Gulan provnce usng data envelopment analyss method. 32 ndustrals dary farms were selected by cluster and data were collected through a questonnare. The average techncal effcency of the unts was 88.3%. These unts have the ablty to ncrease producton by as much as 11.7% whle mantanng the current level of nputs. Darjan (2011) studed the effectve factors on the techncal effcency of broler chckens n Gorgan provnce. For ths purpose, the producton functon was estmated. The results showed that the average techncal effcency of sem-mechanzed unts was 57.66% and the possblty of ncreasng the product by usng exstng nputs and technology was possble. The survey showed that the technology score had a postve and sgnfcant effect on effcency, so that a one percent ncrease n the technology score would ncrease 4.48 percent of the producton. Amn Shal et al. (2012) evaluated the

2 Intl J Farm & All Sc. Vol., 7 (3): 73-77, 2018 effcency of dary cattle farms n south of Tehran provnce usng a data envelopment analyss approach. Data was collected from 65 ndustrals dary farms and the average techncal effcency level was calculated 93%. The potental for ncrease n yeld by mantanng the current level of nputs was 7% on average n the unts studed. Also, the average level of allocatve and economc effcency was 45% and 42%, respectvely. The studed unts had the potental to reduce producton costs by as much as 55% and ncrease economc proft to 58%. Fathzadeh Golshan et al. (2012) evaluated the techncal effcency n Holsten cattle breedng unts of Gulan provnce usng data envelopment analyss. Informaton was collected from 20 Holsten cattle breedng unts. The results showed that the average techncal effcency n the studed unts was 72.6%. Whch ndcates that, on average, 27.4% of the current product could be ncreased wthout ncreasng the nput level. Mohammad (2012) used data envelopment analyss method to study the effcency of greenhouse cucumbers n Fars provnce. The results of hs study showed that wth constant return to scale assumpton, the average techncal and allocaton effcences of unts were 74% and 93%, respectvely. Also, the calculated techncal effcency range was greater than the allocaton effcency. The results of the research ndcated that the economc effcency n constant and varable returns was 69% and 72%, respectvely. Ghorban et al. (2013) showed that the average techncal effcency n dary farms n Gulan provnce was percent and the hghest correlaton coeffcent between techncal effcency and daly gan was observed. Based on the results of ths study, wth the proper management, there was a possblty of ncreasng techncal effcency. The average techncal effcency n the expermental group was 60%, whch s more than the control group wth 33%. Based on the results of the study, techncal effcency was not affected by geographcal locaton. Watkns et al. (2014) assessed the techncal, allocaton and economc effcency of rce producton n the state of Arkansas usng data envelopment analyss. The results of the research showed that the farms were n the optmal level n terms of techncal effcency and the mnmum nputs were used for the producton of the product. The techncal effcency n constant and varable returns to scale, allocatve effcency, economc effcency and scale effcency were 0.803, 0.875, 0.711, 0.622, and 0.920, respectvely. MATERIALS AND METHODS In a smple defnton, effcency s the output-to-nput rato. Ths rato can be calculated at any level. Among dfferent methods of measurng effcency, data envelopment analyss method has a specal place due to ts greater flexblty. Data envelopment analyss uses lnear programmng method to estmate techncal, allocatve and economc effcences. Equaton 1 shows the nput-orentated stuaton wth constant return to scale assumpton (Coell, 1997): mn st XL x YL y I T L 1 L 0 x Where s techncal effcency (TE ), s the nput vector used by the -th unt and s defned for each frm separately. The vectors of nputs used by dfferent unts make X matrx wth N K dmensons, n whch K s the number of nputs used n the producton process. To calculate the allocaton effcency, t s need to calculate the economc effcency by equaton 2: mn L, x wx st y YL 0 XL 0 x I T L 1 L 0 (1) (2) 74

3 Intl J Farm & All Sc. Vol., 7 (3): 73-77, 2018 w x In Equaton 2, and are nput prce and cost mnmzaton use of nputs, respectvely. Usng these nformaton, the economc effcency of the unts s obtaned by equaton 3: (3) CE w x wx Where CE represents economc effcency. Allocatve effcency s calculated by equaton 4: (4) CE AE TE Where AE RESULTS AND DISCUSSION represents the allocaton effcency (Coell, 1997). Results showed that the average techncal effcency of 22 provnces was 0.98, whch ndcates the effcent use of nputs ncludng seed, manure, herbcde, nsectcde, fungcde, phosphate, ntrogen, potassum, drect labor and water, but the results of economc effcency ndcates that average score was In other words, t s possble to reduce the producton cost by 25%. Wth the separaton of economc effcency to allocaton and techncal effcences t was observed that a sgnfcant amount of surplus costs was due to allocaton neffcency, so that the ndex was 77% on average. Table 1 presents the techncal, allocaton, and economc effcences of the studed provnces. Table.1 Techncal, allocaton and economc effcences provnce techncal allocatve economc East Azerbajan West Azerbajan Ardabl Esfahan Tehran Kerman, Dstrct of The South Chaharmahal & Bakhtar Khorasan Razav North Khorasan Khuzestan Zanjan Semnan Fars Golestan Lorestan Mazandaran Hormozgan Hamedan Yazd Kurdstan Kerman Kermanshah average As the results show only Esfahan, Kerman (Dstrct of The South), Zanjan and Hamedan do not have the full functonalty from the techncal pont of vew and only three of these 22 provnces have been economcally effcent. Chaharmahal & Bakhtar, Mazandaran and Kermanshah smultaneously have been operatng optmally n terms of techncal, allocatve and economc effcences. The economc effcency gap and the dfference between the avalable amount and the optmum level depend on the unt performance n terms of techncal effcency and allocatve effcency. Techncal effcency s related to the use of nputs and, f less than one, ndcates the lack of 75

4 Intl J Farm & All Sc. Vol., 7 (3): 73-77, 2018 optmal use of nputs. By comparng the exstng level of nputs consumpton and the optmal level (the mnmum observed cost), the recommended consumpton levels are reported by the unts. The results ndcate that n average the consumpton of seed, manure, herbcdes, fungcdes, ntrogen, drect labor and water s more than the optmal economc and the largest gap s for seed by kg excess usage. However, nsectcdes and potash are used less than optmum amount. The results from effcency analyss show that the man problem of potato producton n Iran s resource allocaton, so by optmzng, the proft margn can be ncreased. The average level of optmum use of seed, anmal manure, herbcdes, nsectcdes, fungcdes, phosphates, ntrogen, potash, drect labor force are kg, 3.6 ton, 0.7 kg, 1.1 kg, 0.5 kg, kg, 181 kg, 58 kg, 17 day-person and Rals. In Table 2, the current composton, optmal composton and the requred moderaton n average values are proposed to mprove the effcency of the provnces under study, along wth the requred change percentage. Table 2: Optmal usage of nputs n terms of mean n studed provnces Chang Chang Prce Cost (10Rals) Input Unt Current Optmal e (abs.) e (%) (10Rals ) current optmal Change(abs. ) seed Kg manure Ton herbcdes Kg nsectcde Kg s fungcdes Kg phosphate Kg s ntrogen Kg potash Kg Drect Dayperson labor water 10Ral s Total (10Rals) CONCLUSION the results show that the maxmum and mnmum expected reductons relatve to the current consumpton level of nputs are related to seed and fungcde, respectvely. In terms of value, prorty must be gven to seed and water nputs. It s expected that mprovng economc effcency can reduce potato producton cost about Rals per hectare n Iran. The results clearly ndcate that t s not economcally possble to provde a consstent nstructon for all nputs. REFERENCES Amn Shal, S. H., Yazdan, A. R., Chzar, A. H. & Alae Borujen P Measurng the effcency of ndustrals dary cattle breedng farms usng data envelopment analyss: A Case study n southern Tehran provnce, Iran. Journal of Agrcultural Economcs Research, 4(13), Coell, T. J A gude to deap verson2.1: a data envelopment analyss (computer) program. Department of econometrcs, Unversty of New England, Armdale, NSW, Fathzadeh Golshan, R., Shadparvar. A., Ghorban, A. and Mehdzadeh, M An estmaton of techncal effcency and return to scale n Holsten producton unts n Gulan provnce, usng Data Envelopment Analyss method. Iranan Journal of Anmal scence, 43 (4), Ghorban, A., Rahm Abad, E. and Mr Mahdav, S. A Evaluaton of techncal effcency and model of calf fattenng n Glan provnce. Anmal scences, 101, Jhad Agrculture Mnstry Cost of producton of agrcultural products: crop year Results of major products by provnce. Deputy Drector of Plannng and Economc Affars. Center for Informaton and Communcaton Technology. 76

5 Intl J Farm & All Sc. Vol., 7 (3): 73-77, 2018 Jhad Agrculture Mnstry Agrcultural statstcs agrcultural crop Frst volume. Deputy Drector of Plannng and Economc Affars. Mohammad, H. (2012). Applcaton of data envelopment analyss method n studyng the producton effcency of cucumber greenhouse n Fars provnce. Journal of Agrcultural Economcs Research, 6(1), Rafee, H., Heydar Khormz, S. S. and Ganj Khanlou Total factor productvty effcency and calculaton of effcency and scale effcency n mlk producer dares: A case study of Gulan provnce. Journal of Agrcultural Economcs Research, 3(4), Watkns, B. K., Herstovska, T., Mazzant, C., Wlson, Jr. and L, Schmdt Measurment of techncal, allocatve, economc and scale effcency of rce producton n Arkansas usng data envelopmeant analyss. Journal of agrcultural and appled economcs. 46 (1):