Pattern of investment allocation to chemical inputs and technical efficiency: A stochastic frontier analysis of farm households in Laguna, Philippines

This study focuses on the pattern between investment in chemical inputs such as fertilizer, pesticides and herbicides and technical efficiency of farm households in Laguna, Philippines. Using a one‐stage maximum likelihood estimation procedure, the stochastic production frontier model was estimated simultaneously with the determinants of efficiency. Results show that farmers with a low technical efficiency score have a high investment share in chemical inputs. Farmers who invested more in chemical inputs relative to other variable inputs attained the same or even lower output and were less efficient than those farmers who invested less. The result shows that farmers who invested wisely in chemical inputs can encourage farmers to apply chemical inputs more optimally.