Analysis of farmers' efficiency and growth factors in oil exporting Arabian gulf countries: the case of Oman

Abstract

This paper presents a best practice analysis of farmers' technical efficiency and returns to scale in the Sultanate of Oman, using Data Envelopment Analysis (DEA). The Charnes-Cooper-Rhodes (CCR) and Banker-Charnes-Cooper (BCC) models are used to compute relative efficiency measures for individual farmers. We used the Two-stage Ordinary Least Squares (OLS) method to predict the production output for technically efficient farmers. It identified increasing returns for the industry and showed the positive effect of cropland size and water quantity on production output. We also used factor analysis to describe the variance-covariance structure of the input variables and DEA efficiency measures. It showed the validity of using four inputs under BCC efficiency in terms of percentage of variability explained.