Influencing factors and determinants of wheat production efficiency and productivity in Mongolia: a stochastic frontier analysis

This study estimates the efficiency and productivity of wheat production in Mongolia by analysing the influencing factors such as farm management practices and agricultural technologies which are currently missing in the academic research on wheat production in Mongolia. The study applied stochastic frontier analysis (SFA) to examine the technical efficiency (TE) and total factor productivity (TFP) of Mongolian wheat producers. 

This study used a balanced panel dataset over 2012 to 2014 for 92 wheat producers in Mongolia. Production output was selected as the dependent variable, and land, labour, capital, fertiliser, fuel and seeds use were selected as independent variables. Inefficiency determinants representing agricultural technology were tillage systems, cultivation stages, plant protection stages, age of farm machinery and seed disinfectant. In addition, climate and weather-related factors of temperature and precipitation were included in the estimates as random variables. 

Five different specifications of stochastic frontier analysis with assumptions on the temporal behaviour of technical efficiency were estimated and compared. The analysis found the fourcomponent specification that separates the persistent and time-varying components while controlling firm heterogeneity was superior and suitable for the sample data. The results show that the average total technical efficiency was 62%, with persistent and time-varying efficiencies of 85% and 72%, respectively. The study finds that the TFP decreased by 1.8% with its components, a 5.7% decrease in scale change, a 3.3% decrease in technical change, and a 7.2% increase in technical efficiency. 

The study also revealed that the capital, seeds, plant protection stages and seed disinfectant are positively related to the technical efficiency, while an increase of tillage, age of farm machinery and temperature negatively affected the technical efficiency.