Technical Efficiency and Its Determinants in Food Crop Production: A Case Study of Farms in West Bank, Palestine

Abstract

In this study, farm level technical efficiency (TE) and its determinants were investigated. A stochastic Cobb-Douglas (CD) production frontier was used to provide estimates of input-oriented TE for a sample of 100 rain fed farms in two Palestinian governorates. Empirical findings showed that the estimated TE of the farms in the pooled sample ranged from 35.7 to 95.6%, with a mean value of 72.2%. This suggests that, on average, farms in Jenin and Tubas can potentially increase their productivity by as much as 28% through more efficient use of inputs. Analysis of the main determinants of TE suggested a positive relationship between farmers’ level of education, experience, access to credit and extension services, and membership in a cooperative. We argue that access to credit and strengthening of capacity within the national extension system are critical areas of public policy concern in order to affect levels of agricultural production and productivity in the West Bank. Keywords: Cobb-Douglas stochastic frontier model, Cross section data, Palestine, Rainfed farms