An Analysis of the Impacts of Weather on Technical Efficiency in Czech Agriculture

Abstract

Although weather is a significant determinant of agricultural production, it is not a common practice when analysing production to control for its impact. The problem is methodological, since it is difficult to find a proper proxy variable for weather in these models. The aim of this study is to investigate these issues. First, several possibilities for describing weather and its inclusion into stochastic frontier models are defined and discussed. Then, the explicit impact of weather on the technical efficiency of Czech farmers in different regions of the Czech Republic for the period 2004–2009 is analyzed and discussed. We use a proxy variable in the form of Iowa indices in the production analysis, in order to capture the impact of weather on technical efficiency. A stochastic frontier production function model in the form of the BC Model is defined, and weather enters the model as a variable explaining technical inefficiency. The paper arose within the framework of solution of the 7th FP EU project COMPETE no 312029.

Keywords

• technical efficiency
• weather
• SFA (Stochastic Frontier Analysis)
• Czech agriculture