A metafrontier analysis on the performance of grain-producing regions in Norway

Abstract

Previous application of the stochastic frontier model and subsequent measurement of the performance of the crop sector can be criticized for the estimated production function relying on the assumption that the underlying technology is the same for different agricultural systems. This paper contributes to estimating regional efficiency and the technological gap in Norwegian grain farms using the stochastic metafrontier approach. For this study, we classified the country into regions with district level of development and, hence, production technologies. The dataset used is farm-level balanced panel data for 19 years (1996-2014) with 1463 observations from 196 family farms specialized in grain production. The study used the true random effect model and stochastic metafrontier analysis to estimate region level technical efficiency (TE) and technology gap ratio (TGR) in the two main grain-producing regions of Norway. The result of the analysis shows that farmers differ in performance and technology use. Consequently, the paper gives some regionally and farming system-based policy insights to increase grain production in the country to achieve self-sufficiency and small-scale farming in all regions.