Applying regression quantiles to farm efficiency estimation

This article is concerned with the methodological question of frontier production functions estimation for agriculture, and the appropriateness of regression quantiles, as a useful semi-parametric approach. Better insights are reached using the proposed methodology that provides robust farm efficiency scores estimates. Using the 2007 Farm Accountancy Data Network (FADN) data for Greece, analysis shows that the distribution of efficiency scores is closer to normality when employing regression quantiles, while underestimation of efficiency obtained by other parametric or deterministic methods based on the conditional mean can be avoided. The results further suggest that government support aimed at enhancing farms viability should be directed towards payments decoupled from output or prices, as well as rural development payments that affect productivity in a uniform way.