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Cost Efficiency and Farm Self-selection in Precision Farming: The Case of Czech Wheat Production

Jarmila Curtiss and Ladislav Jelinek

No 135784, 131st Seminar, September 18-19, 2012, Prague, Czech Republic from European Association of Agricultural Economists

Abstract: This paper examines allocative and cost efficiency implications of adopting variable-rate fertiliser application using survey data from Czech wheat farms. Data Envelopment Analysis delivered higher efficiency scores for precision farming (PF) adopters. Correcting for selection bias using a one-step endogenous switching regression reveals that farms displaying a lower cost efficiency score are less likely to adopt PF technology. Nonadopters switching to PF technology would likely be affected by a significant decrease in cost efficiency given their production conditions and/or managerial and technical skills. In line with this, results indicate that human capital and farm size increase the likelihood of PF adoption. Cost (allocative efficiency) implications of PF-related changes in input structure only, on the other hand, are not found to have an impact on the choice of technology. A positive allocative efficiency effect of PF technology is brought about mainly by a farm's ability to better extrapolate the soil's productive potential, which is insufficiently reflected in the land rental prices. The allocative as well as cost efficiency implications of PF technology are further related to technology-specific responses to various farm characteristics and technological practices. PF technology makes farms' efficiency more responsive to production conditions, farm specialisation, legal form and other technological practices. The overall efficiency effect the PF practices is, therefore, conditioned on farm characteristics.

Keywords: Agribusiness; Agricultural and Food Policy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-eff and nep-tra
Date: 2012-09-18
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaa131:135784

DOI: 10.22004/ag.econ.135784

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