Farm‐Specific Technical Efficiencies and Development Policies

Agricultural policies in developing countries are mostly concerned with the means of increasing production levels, especially of food grains. The green revolution or new technology has been recognised by decision makers as an important tool in this context. Consequently, the primary objective of any agricultural policy is to achieve high rates of adoption of new technology by farmers. The fact that the success of new technology depends on the efficient use of the technology receives less attention from the decision makers. How crucial this issue of the efficient use of technology is to increasing production levels is examined in this article. The empirical focus is the area with the highest rate of adoption of new technology in the Philippines. Using the stochastic production frontier, farm‐specific technical efficiency is empirically estimated for individual sample observations. The results show a wide variation in the level of technical efficiencies among the sample farmers; and an extension service has been identified as an important factor causing such variations.