| Using stochastic frontier analysis, efficiency of production of wheat in Western Australia was studied. The production function model used was a relatively simple input model, consisting of wheat yield, effective rainfall, fertilizer application rates and year of study. Inefficiency was captured in a second model that incorporated machinery capital investment, opening equity level, and year of study. Data covered the production years 2004 through to 2007. The results demonstrated that inefficiency was present in wheat production in Western Australia and that inefficiency increased over the period from 18% in 2004 to 29% in 2007. Higher machinery investment per hectare and opening equity levels reduced inefficiency, due to producers having sufficient... |
