Input shadow prices and overall efficiency of vegetable farms in Uzbekistan

Abstract

This paper attempts to estimate overall inefficiency of the sample of vegetable farms in Uzbekistan. Using the duality between the directional input distance function (DIDF) and the cost function, the study reports allocative inefficiency scores in addition to technical inefficiency in the vegetable farming system. Model results suggest for substantial reduction of input costs while maintaining the current level of production technology. Findings imply for better organisation of farming, improving access to market information, and developing extension services. The derived shadow prices of land and labour in the existence of production inefficiency could be of great interest to policy makers and researchers. Insofar as market-based reforms could take place and better incentives are provided, inefficient farmers could learn from farming best practices and adopt innovative and cost-effective ways of farming.