In this article we perform production efficiency analysis for the 40 countries with largest value added by agricultural sector in 2005. Under the assumption of a nonparametric frontier and production observations satisfying a statistical model including both random and inefficiency errors, we estimate an agricultural production function using DEA measures of efficiency with output orientation and variable returns to scale. We found evidence that the set of countries investigated could increase their total value added by agricultural sector for at least 53.9% without increasing input usage with the prevailing technology. This result has a direct impact on issues related to the recent food crisis.

Introduction to Data Envelopment Analysis and Its Uses: With DEA-Solver Software and References has been carefully designed by the authors to provide a systematic introduction to DEA and its uses as a multifaceted tool for evaluating problems in a variety of contexts. The authors have been involved in DEA's development from the beginning. William Cooper (with Abraham Charnes and Edwardo Rhodes) is a founder of DEA. Lawrence Seiford and Kaoru Tone have been actively involved as researchers and practitioners from its earliest beginnings. All have been deeply involved in uses of DEA in practical applications as well as in the development of its basic theory and methodologies. The result is a textbook grounded in authority, experience and substance.

Agricultural production in Ghana is mainly carried out by smallholder farmers on a subsistence basis. Smallholders constitute about 95% of the farming population and produce 80% of the annual output. This study investigates the level of technical efficiency of a sample of 294 households from the Upper East region of Ghana. Technical efficiency and its determinants are investigated using parametric stochastic frontiers and nonparametric data envelopment analysis methods. This is the first study that uses bootstrap DEA and Bayesian frontier methods in efficiency analysis of agriculture in Ghana. Results from our analysis show that mean technical efficiency is low and there is significant variability in efficiency among the sample farms. There is significant positive correlation of efficiency estimates from nonparametric and parametric models which indicates the robustness of the results. The results imply that agricultural productivity can be increased substantially through improvement in technical efficiency. From a policy perspective, age (as a proxy for farming experience), educational status, use of hired labour and farm size, have been found to hold the greatest potential for improving technical efficiency in Ghanaian agriculture. Policy implications from the analysis of the determinants of technical efficiency are sensitive to the methods used to estimate technical efficiency.

This book covers recent advances in efficiency evaluations, most notably Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) methods. It introduces the underlying theories, shows how to make the relevant calculations and discusses applications. The aim is to make the reader aware of the pros and cons of the different methods and to show how to use these methods in both standard and non-standard cases. Several software packages have been developed to solve some of the most common DEA and SFA models. This book relies on R, a free, open source software environment for statistical computing and graphics. This enables the reader to solve not only standard problems, but also many other problem variants. Using R, one can focus on understanding the context and developing a good model. One is not restricted to predefined model variants and to a one-size-fits-all approach. To facilitate the use of R, the authors have developed an R package called Benchmarking, which implements the main methods within both DEA and SFA. The book uses mathematical formulations of models and assumptions, but it de-emphasizes the formal proofs - in part by placing them in appendices -- or by referring to the original sources. Moreover, the book emphasizes the usage of the theories and the interpretations of the mathematical formulations. It includes a series of small examples, graphical illustrations, simple extensions and questions to think about. Also, it combines the formal models with less formal economic and organizational thinking. Last but not least it discusses some larger applications with significant practical impacts, including the design of benchmarking-based regulations of energy companies in different European countries, and the development of merger control programs for competition authorities.