Management outputs efficiency comparison: The credit departments within farmer associations in Taiwan and Japan

Abstract

Farmer associations (FAs) in Taiwan and Japan Agricultural (JA) Cooperatives in Japan play an important role in agricultural development. Both have experienced dramatic changes in the macroeconomic environment, and have faced similar management issues. This study focuses on the comparison of operational management efficiency and productivity between the two agricultural institutions in two different countries, focusing on their respective credit departments. Using financial data covered from 2010 to 2014, a Stochastic Metafrontier Regression Model is adopted to explore how operating performances have influenced the productivity of such institutions. Environmental variables such as number of regional financial institutions, regional location, scale of fixed assets, and population density affect inefficiency. With an overall higher number of input and output variables, results show that the average efficiency of credit department within JA Cooperatives when producing output is at 97%, while that of FAs is lower at 90%. Therefore, FAs have more room for efficiency improvement and technological progress.