Technical efficiency and metatechnology ratios under varying resource endowment in different production systems : A stochastic metafrontier model in Bangladesh dairy farms

Purpose - The purpose of this paper is to compare technical efficiency and metatechnology ratios (MTR) in three production systems confronted with different technological and resource endowments in Bangladesh to identify the suitable production systems for increasing productivity. Design/methodology/approach – The primary data collected by authors from 180 dairy farmers were sampled and modeled in a stochastic metafrontier framework due to its ability to estimate and compare the efficiency of firms among various groups with possibly different group-specific technologies and heterogeneous production environments. Findings – The empirical results show that farms from intensive system were closer to their production frontier than extensive and traditional system. Regarding productivity differences among systems, the MTR is by far highest for intensive, indicating the technological advantage of this system over others two systems. The estimation of farm-specific inefficiency model revealed that farmers’ access to extension and credit services are assumed to be significant determinants in reducing inefficiency. Practical implications – This study concludes that the ability of the farmers to increase productivity vary depending on the production systems due to variation in resource endowments and access to various inputs and support services. Thus, improving productivity depends on effective policy design on harmonizing access to resources and delivery of extension and credit services. Originality/value – The empirical analysis of data representing different production endowments by stochastic metafrontier make it possible to identify the efficiency level as well as technology gap, thus, ways to identify the possible policy options reducing those gaps and improving productivity.