Assessment of Neighborhood and Spillover Effects on Technical Efficiency of Irrigated Rice Farmers

Neighborhood and spillover effects on technical efficiency were investigated among 270 randomly drawn farming households from 18 irrigated villages in Guimba, Nueva Ecija, Philippines, using a two-step procedure. In the first stage, stochastic frontier production function was used to estimate farmer’s technical efficiency; in the second stage, appropriate spatial econometric models of technical efficiency were estimated. Spatial econometric models adopted in this study detected spatial dependency on technical efficiency in the error term of the spatial model across seasons and locations, which can be associated with unobserved factors that similarly influence farmers’ technical efficiencies at the same time. Farm size, income, and regular contact and consultation with agricultural technicians were found to significantly affect technical efficiency. Results of the spatial regression show that owner-cultivator status and loamy soil are associated with increased technical efficiency. The local government of Guimba can use findings of this study in formulating agricultural policies and implementing essential interventions to improve the technical efficiency of rice farmers.