TECHNICAL EFFICIENCY ANALYSIS OF WHEAT PRODUCERS IN KAZAKHSTAN AND RUSSIA: STOCHASTIC FRONTIER APPROACH

Abstract

Kazakhstan, Russia and Ukraine (KRU) already collectively account for about quarter of the world wheat exports and those countries have still huge unrealized production potential. This production potential can be realized if improvements in production efficiency achieved since an average yields yet are far below compared to the developed countries like US and Canada. Need for efficiency improvements are often mentioned and governments implemented several policy reforms to advance production efficiencies. However, empirical research on the effects of such policy reforms is scarce, particularly in the case of KRU countries. This study aims at filling this gap with using cross-sectional data from wheat producing farms across six regions of Kazakhstan and Russia employing a two-step stochastic frontier production analysis. Analysis suggest that the factors like an access to capital assets, farmer’s education and use of crop insurance can improve technical efficiencies of farms. On the other hand, subsidy payments from government seem to have strong negative impact on farm’s technical efficiency.