This study aims to measure the total factor productivity of the main governorates of wheat production in Egypt during the time period 1990-2012 and decompose it into technical change, efficiency change and scale change. We used Global Malmquist TFP index as a non-parametric approach. The results indicated that the contribution of technical change component is more important than the efficiency change component. In fact technical change rose, 25.7%, while efficiency change presented a little decline, 3.7%. The decomposition of efficiency change indicated that the main problem of wheat production in Egypt was scale efficiency that worsened by 5.5%.
Egypt is located on the northeast corner of the African continent. It is bordered by Libya to the west, Sudan to the south, the Red Sea to the east, and the Mediterranean Sea to the north. Egypt has the largest, most densely settled population among the Arab countries. The total area of the country covers approximately one million square kilometers (
In Egypt wheat is the most important winter crop. It is produced widely in both the older farming lands of the Delta and in the newly-farmed lands reclaimed from the desert. The vast majority of Egyptian wheat farms are small, irrigated, and owner-operated. Winters are without frost, but sufficiently cool for wheat. The mean daily temperature during the wheat growing period range from 15.7°C to 21.4°C. Wheat plays an important role in farmers’ crop rotations. The most common winter-summer rotations are wheat-rice, clover-cotton, wheat-maize, and clover-maize (
Two major factors are seriously increasing the rate of change in domestic wheat consumption, the rate of population growth and the rate of growth in wheat consumption per capita. These two factors are, consequently, affected by numerous other factors such as the adopted economic policies, income and its distribution among individuals, and the rate of change in prices (
The study of total factor productivity (TFP) of wheat production in Egypt is a crucial issue as it provides more precise information about what happen in the production process. Agricultural policy-making could be improved through identifying the sources of productivity change (
The main novelty of this work was the use and comparison of different techniques for measuring and decomposing TFP: contemporaneous Malmquist (
The results showed that the problems of wheat production in Egypt were related more with the farms’ size and the efficiency of their resources than with the technology they used. Indeed, we concluded that scale issues hindered technical progress in Egyptian wheat production during the period 1990-2012. These findings leaded to suggest and prioritize political actions (land consolidation processes, agricultural extension activities, more resources in agricultural research and development) by Egyptian governorates.
The terms productivity and efficiency are often used interchangeably but they are not precisely the same things (
Many studies on productivity in the field of agricultural production have used DEA approach, which was become popular for several reasons (
In recent years several studies have been conducted on TFP based on DEA, which provides an indicator to compare productivity performance between firms and over time.
We did not find empirical works that estimate TFP of wheat production on the level of governorates in Egypt. Therefore, from this perspective this is a novel work. From the point of view of establishing an agricultural policy for Egypt, the contributions of this work are important because it provides recommendations for improvement.
The nonparametric approach has been extensively applied to estimate TFP growth. Firstly, DEA models are running with linear programming methods to measure the distance from one decision unit, a province in our case, to the frontier. In a second step TFP growths are estimated through Malmquist indices. They do not require any assumptions regarding efficiency and functional form, and are therefore able to distinguish between the factors causing changes in productivity. In addition, Malmquist TFP index (DEA model) may be used to decompose the productivity change into TC and EC in the presence of panel data.
The Malmquist TFP index is introduced as a theoretical index by
Hence the Malmquist productivity index is simply the product of the change in relative efficiency that occurred between periods t and t+1, and the change in technology that occurred between periods t and t+1. A value of Malmquist TFP index equal to one implies there has been no change in TFP across the two time periods, greater than one implies a growth in TFP and a value less than one is interpreted as deterioration in TFP. A similar interpretation applies to the two components as well.
The value of EC measures the overall change in relative efficiency, and is a measure of the distance between observed production and the maximum possible production level between the two time periods t and t+1. The component of TC, calculated as the geometric mean of two ratios, measures the shift in production technology. This ratio represents the relative change in the input technologies over the time period t and t+1 (
This approach presents some problems, such as possible infeasibility in DEA models and lack of circularity. To overcome this,
where the output distance indices are measures respect to a global benchmark technology, defined as the convex hull of the set of all period’s technologies. can be also decomposed into EC and TC:
The EC index of
In this work distance functions were obtained through well-known DEA efficiency measures such as CCR model (
Egypt is divided for administrative purposes into 27 governorates.
The summary statistics for the variables used in the analysis are presented in
PC of wheat production in Egypt has grown up with an average annual rate of 0.87%. The accumulative PC during the time period 1990-2012 was slightly over 21%, but this growth mainly occurred in the first half, and more specifically between 1995 and 1999. The accumulative PC rise was 19.55% by 1999, almost the same figure that in 2012. Thus TFP barely rose during the 2000s.
The decomposition of PC shows that the contribution of TC component is more important than the EC component. In fact, TC rose while EC presented a little decline. The average annual rate of TC was 1.05%, with an accumulative growth of 25.73% in the last period year. Here again, it seems that the bulk of this advance occurred during the first half, since the accumulative TC reached almost 20% by 2000. In contrast, the accumulative EC was 0.963 in 2012 which indicates a regression of 3.7% respect to 1990 in terms of efficiency.
The decomposition of the latter index shows that pure efficiency faintly increases but scale efficiency suffers a decrease. PEC increased at an average annual rate of 0.08%, with an accumulative progress of 1.88%. On the other hand, SEC decreased and took a value in 2012 94.51% lesser than in 1990. Therefore, the main problem of wheat production in Egypt is scale efficiency. This means that wheat production within Governorates does not work with its optimal size.
TC governorate indices point to low spatial variability of TC. Indeed, 9 out of 11 indices range between 25-30%, being the exception Assuit, 19.09% and Suhag, 15.27% (the lowest). These figures highlight that agriculture modernization has been a rather widespread and ubiquitous phenomenon in Egypt. On the contrary, EC indices were very different among governorates and followed a rather similar pattern that PC. That is governorates with advances in EC, such as Suhag (20.93%) and Behairah (4.70%), presented also the highest increases in PC; meanwhile governorates with the highest regress in EC,
The decomposition of EC shows that there was a common regress in scale efficiency, this may be due to the farm size average in Egypt is small. Apart from Suhag, with a slight scale efficiency increase, 1.19%, and Menoufia, 0%, SEC indices decreased. In
Some governorates, such as Behairah and Assuit increased enough in PEC so as to compensate scale efficiency decrease. Behairah and Assuit PEC values were frequently above 1 (Fig. 2). Some other, Dakahlia, Gharbia, Kafr Elshikh and Menia, drop in both, which in turn mitigates advances in TC. Suhag is the unique governorate that succeeds in growing all indices.
Wheat is one of the most important agricultural crops in Egypt. From 1990 to 2012 wheat production increased 92.80% but the main inputs grew in smaller proportions, between 58 to 66%. As a consequence partial and total productivity also experienced increases. TFP growth of wheat production in Egypt has grown up 21%. This advance mainly occurred in the first half, and more specifically between 1995 and 1999. During this decade a series of reforms were implemented,
The decomposition of productivity growth shows that the contribution of TC component is more important than the EC component. In fact, TC rises 25.7% while EC presents a little decline, 3.7%. The reforms of production and trade mentioned above undoubtedly provided a boost to the modernization of agriculture, that is reflected in the increase in TC. But despite this, continued to exist a series of structural deficiencies in transport, storage and access to information (
The findings in some other recent studies reveal problems with both TC and EC. For example,
TC by governorate confirms that the agriculture modernization process has been extended throughout Egypt, as is appreciated looking at the narrow variability of these indices,
On the other hand, scale efficiency decreased in 9 out of 11 governorates; two of them, Behairah & Assuit, increased enough in PEC so as to compensate scale efficiency decrease; but in the remaining seven governorates the efficiency indices diminished, and as a consequence total productivity growth was lower than technical growth. This is in consonance with
From this work we suggest the following recommendations. Some measures to mitigate scale efficiency problems would include the increase of wheat production area through the reclaimed agricultural areas, as well as implementing land consolidation processes that would increase farm size and reduce production costs. PEC could be boosted by organizing agricultural extension activities that would improve the training of labor. Especially important are the skills of cultivation and irrigation techniques, as was stressed by
Given that TC has maintained stagnant in last decade it would be advisable to put more resources in agricultural research and development. This would permit to take advantage of genetic improvements, which should enable the introduction of new wheat varieties with higher productivity.
The main limitation of this work is the lack of information on other variables to connect with the results. Future works need to carry out on the farm level through the use of surveys, in order to investigate the socio-economic factors such as age, education, sex, composition of labor, quality of land, property of land, etc. that affect the efficiency and productivity of wheat production in the different farms and governorates.