Are Efficient and Inefficient Farms Heterogeneous? Evidence from Kansas Farms

Abstract

Most of the previous literature on efficiency assumes that efficient and inefficient farms are homogeneous in production, even though they may have different strategies to increase efficiency. Exploiting Super Data envelopment analysis (DEA) and quantile regression, this study examines the sources of efficiency with particular consideration of the heterogeneity between efficient and inefficient farms using a farm-level dataset. The results show that an increase in some farm characteristics, such as the number of beef cows, percentage of income from beef cows, and percentage of acres owned, affects efficiency in different ways for efficient and inefficient farms. These results imply that efficient and inefficient farms are heterogeneous in terms of how farm characteristics affect efficiency.