Abstract:
Agriculture plays a vital role in poverty alleviation across Asian countries as a considerable
portion of the rural population depends on it for their livelihood. However, the Asian
agriculture sector faces numerous challenges, including fluctuations of input prices, shifting
consumer demands with population growth, unsustainable farming practices and most
importantly, the impacts of climate change and extreme weather conditions. To overcome
these challenges, Asian countries aim to maximize their output efficiently using available
inputs. This study reveals the current efficiency levels and potential improvements in Asian
agriculture by assessing technical efficiency and technology gap ratios in the whole
agricultural sector, including crop production, livestock, and integrated farming systems
across 28 Asian countries from 1992 to 2021, classified based on income levels. The Cobb
Douglas production function was used as the functional form of stochastic frontier analysis,
covering key inputs- land, labor, fertilizer, and pesticides. Deflated values of agricultural
production served as the primary output variable. The study examines variations in
production technologies among high-income, upper-middle-income, and lower-middle
income countries using a stochastic meta-frontier model. The findings indicate that the
average technical efficiency in the Asian agricultural production is 0.54, showing that
agricultural output could increase by 46% if all countries operated at their maximum
efficiencies. Among three income groups, upper-middle income countries exhibited the
highest average technical efficiency at 0.82, showing their capacity to utilize inputs relative
to their group-specific production frontiers. Technology gap ratios further highlighted the
disparities in potential output, with high-income countries reaching 52% of their potential,
while upper-middle income countries and lower-middle income countries achieving 62%
and 49% respectively. These findings emphasize the need for targeted interventions, such
as facilitating technology transfer from high-performing countries, investing in extension
services, improving access to quality inputs, and encouraging data-driven agricultural
practices, especially in lower-middle income countries to enhance technical efficiency and
bridge the efficiency gaps.