Benchmarking Technology in the Stochastic Frontier Maize Production of Northern Vietnam : Difference in Difference Approach

Northern Vietnam is famous for its maize production nationally, however, due to the conventional farming practice of farmers, the efficiency of maize production is still unmatched its potential. The government has already legislated many agricultural policies toward supporting by farmers by subsidies, finance support and agricultural practice training for years. This study examines the efficiency of contemporary government policies by applying benchmarking in technical efficiency analysis then using Difference in Difference method to determine the change in technical efficiency from 2008 to 2010. In term of functional form, the result suggests that the translog function is best fit for technical efficiency estimation of maize production in Northern Vietnam. In production function, cultivation land is found to be having significantly effects on both subsidised and non-subsidised farmers from 2008 to 2010. Furthermore, location of farmers is statistically significant that signifies cultivation site as one crucial element of technical efficiency determinants. DID estimator is 0.005 indicating that subsidised farmers had increased faster in technical efficiency compared to those who are not received the subsidies. As a result, subsidy programs has potentially positive impact on farmer’s technical efficiency