The paper presents an estimation of technical efficiency and metatechnology ratios for cattle farms in Argentina using the meta frontier approach developed by Battese, Rao and O'Donnell (2004) and O'Donnell, Rao and Battese (2008).
Technical efficiency and metatechnology ratios for cattle farms in Argentina: a meta-frontier analysis
The paper presents an estimation of technical efficiency (TE) and metatechnology ratios (MTR) for cattle farms in Argentina using the meta frontier approach (MF) developed by Battese, Rao and O’Donnell (2004) and O’Donnell, Rao and Battese (2008). The data base is a cross section sample of 1300 cattle farms that were surveyed during the year 2010 in several regions of Argentina. The estimation results show that firms from Pampa´s region (the most important productive zone) have an average technical efficiency (TE) of 53%-56%, meanwhile for others less developed regions like the North-East and Nort-West, the TE is around 94-99%. To obtain a better measurement of the technology gap, the Meta-Technology Ratio (MTR) was estimated. This ratio represents the distance between the regional production frontier and the aggregate technology frontier or Meta-frontier (MF). The average MTR for Pampa´s region is 78-80%, in contrast, the others regions have an average MTR between 19% and 28%. These results are important to identify potential sources of productivity improvements in cattle production. At the Pampa´s region, the production frontiers are relatively close to the MF but the average TE could be improved, which suggests that firms could enhance the use of the existing technology. In other regions, the average efficiency is higher but the technology gap is important. To these cases, productivity gains could come from new technologies adoption and this would make the production function get closer to the MF.