PRODUCTIVITY AND EFFICIENCY DIFFERENCE AMONG KENTUCKY GRAIN FARMS

This paper attempts to estimate productivity and efficiency for Kentucky grain farms by applying a two-stage Date Envelopment Analysis (DEA) and DEA-based Malmquist method. The study covers the years 1999-2015. Also, productivity and efficiency testing hypotheses among different farm sizes and years are estimated. In the first step, productivity and efficiency indices are estimated through deterministic DEA. In the second stage, a panel regression is run with exogenous variables to explain the productivity and efficiency variation. In general small farms were found to be the least scale efficient compared to mid-sized and large farms, even though the results show overall productivity gain and technological improvements during the study. Therefore, small farms need to diversify their scope to survive due to a lack of scale efficiency