The Analysis of the Agriculture Input and Output Efficiency Based on DEA Model

Wen ZHANG

China Gezhouba Group No.3 Engineering Co.,Ltd International Branch,Yichang443002,China

Responsible editor:Xiaoxue WANG Responsible proofreader:Xiaoyan WU

Status quo of Agricultural Input/Output

Agriculture is a disadvantaged business in China,whose development is always influenced by multiple social factors.However,if developed in an unbalanced way,agricultural would seriously affect benefits of people,especially for farmers.With national economy development and global economy integration,agriculture in China is confronted by extruding and challenges of different countries.Domestically,the number of farmers dominates among Chinese population,whose benefits represent the most’s.Hence,it can be concluded that agriculture should be an industry well developed,economically,politically or socially.For a long term,rural economy always lag behind of urban areas,because of insufficient capital.For example,H-D,the theory of the big-push by P.N.Rosenstein-rodan,and cycle of poverty proposed by Nurkse all indicate the key role of capital for development.Therefore,as shown in Fig.1,the input on agriculture from our nation kept increasing,but it is notable that the right trend of input should be crucial for improving input/output efficiency.From the year of the implementation of new rural construction to 2011,with problems of rural development resolved,the fundamental issue of the issue of agriculture,farmer and rural area is not basically resolved.For example,although our nation gives supports to rural regions with subsidy to purchase agricultural machines,farmers have to pay use cost,and it is clear that it is machine-retailer or supplemented-commodity retailer that benefits,instead of farmers.Hence,there is disadvantage in the policy of financial support in agriculture.With consideration of influential factors of agricultural input/output efficiency and the influential factors of DEA model by the number of input/output factors,the research used output of agricultural infrastructure,agricultural fees of preparing agricultural new products,testing,and scientific research,and rural relief fund as input factors,and gross output of agriculture,forestry,animal husbandry and fishery,and the measures in optimizing rural input/output efficiency were proposed based on DEA model.

Researches Available

Many researches available are on input/output efficiency of DEA model.For example,the data of B C Roy[1]were used for comparisons of agricultural public input and marginal benefit of agricultural subsidy,proposing to adjust agricultural public investment according to the principle of decreasing marginal benefit.Hou[2]explored the proper scale of fiscal expenditure from the perspective of target selection and policy optimization of China agricultural investment.Li et al.[3]believed that with limited financial support in agriculture,the efficiency of financial supports can be improved by reducing operating expenses of agriculture,advancing construction of agricultural infrastructure and considerably enhancing investment on agricultural S&T.He et al.[4]made comparisons on the effects of fiscal expenditure,in terms of agriculture policies and agricultural infrastructure,on agricultural output.

Data Envelopment Analysis (DEA),developed by A.Charnes and W.W.Cooper,is used to empirically measure productive efficiency ofdecision making units (or DMUs).The research analyzed the factors affecting financial support in agriculture with DEA model and proposed suggestions on adjustment of rural investment.

DAE Model

Data Envelopment Analysis (DEA)was proposed the earliest by A.Charnes and W.W.Cooper.Assuming n decision making units,and every unit has m input factors deciding the consumption of the units on resources and s output factors referring to benefits of the units after consuming resources,DEA model would be as follows:where Xj=[x1j,x2j,…,xmj]refers to input vector of the jth decision making unit;Yj=[y1j,y2j,...,ysj]refers to output vector of the jthdecision making unit;UTand VTrepresent weight vectors of output and input factors of the jthdecision making unit.

The equation 1 can be transformed into C2,as follows:

whereλjrefers to weights of input or output factors of the jthdecision making unit.On basis of convexity,unavailability and minimization axiom,the linear planning above can be transformed with the non-Archimedean infinitesimal(ε),as follows:where S-and S+,slack variables,were introduced,to determine validity of DEA.

Whenθ*=1,it is determined that the decision making unit is poorly valid of DEA;whenθ*=1,S-=0 and S+=0,it is determined that the decision making unit is valid of DEA; whenθ*≠1,it is determined that the decision making unit is invalid of DEA.

Analysis with Examples

The research collected data in 1978,1980,1985,and 1990 -2009 from wind database,with agricultural infrastructure output (X1),agricultural science and technology output (X2)and agricultural relief (X3),and total output value (Y) of agriculture,forestry,animal husbandry and fishery as output to make calcualtion with DEAP 2.1(Table1).

Conclusions

As shown in Table1,in previous 23 years,DEA proved valid in 4 years,suggesting output efficiency reached optimal,without the problem of inefficient input or output.Considering from synthesis technique efficiency,pure technology efficiency and scale efficiency,synthesis technique efficiency kept decreasing year by year under influence of scale efficiency.As for scale condition,it maintained increasing in last 10 years,which indicated that with input increased,output would grow accordingly.What’s more,input slack variable and output variable were both zero in last two years,incorporating that technology input in China performed better,contributed by accumulated experience.However,synthesis technique efficiency proved invalid of DEA,mainly caused by input scale or executive force.Generally speaking,synthesis technique efficiency was 0.719,pure technology efficiency was 0.902 and scale efficiency was 0.798,which indicated that it is scale efficiency that led lower synthesis technique efficiency.Hence,some suggestions were proposed for optimization.

To improve the proportion of fiscal expenditure for agriculture

Since reform and opening-up,fiscal expenditure for agriculture always keeps increasing yearly,but the proportion has dropped from 13%in 1978to 8%currently,demonstrating that the scale of fiscal expenditure lags behind advancement of national fiscal expenditure,which coincides with the research results.In terms of DEA results,rural input/output kept growing.Therefore,it is necessary to increase the proportion of fiscal expenditure for agriculture to improve rural input/output efficiency.

Table1 Calculations of DEA model(Synthesis technique efficiency=Pure technology efficiency×scale efficiency)

To well hold fiscal expenditure for agricultural prosperity

Rural output scale is of close relationship with investment of agricultural science and technology and infrastructure construction.In 1978,agricultural S&T fee accounted for 1.38%of fiscal expenditure for agriculture,expenditure of agricultural infrastructure represented 66.46%,and of agricultural relief took up to 8.94%,which declined to 0.99%,23.33% and 8.42%,accordingly.It is obvious that the three indices concerning agriculture all decreased to varying degrees,and therefore,it is far from enough to simply increase fiscal expenditure for agriculture.In contrast,the expenditure should be totally input in agricultural construction.Hence,Chinese government should establish a scientific decision making system of financial support in agriculture,introduce expert consultancy and appraisal system and conduct tracing and checking system.For example,local governments should stimulate rural residents in implementing the right to know,participation rights and right of supervision,in order to guarantee the increase of fiscal expenditure of agriculture.

To improve management system

It is important to get rid of traditional system of administrative control and planned economy management.Because of various administrative departments and multiple fiscal expenditure projects for agriculture,it is hard to guarantee advancement and quality of implemented projects.Therefore,although fiscal expenditure is growing yearly,the complex input/output efficiency keeps decreasing.In practice,the administrative department responsible for agricultural fiscal expenditure should downsize the number of administrative departments and deeply prepare survey on agricultural construction to detail agricultural construction and comprehensively grasp the information of fiscal inputs.

[1]BC ROY,SURESH PAL,Investment,Agricultural Productivity and Rural Poverty in India:A State-Level Analysis[J].Indian Journal of Agricultural Economics,2002,57(4):653-676.

[2]HOU SA(侯石安).Target selection and policy optimization of financial investment on agriculture in China (中國財(cái)政農(nóng)業(yè)投入的目標(biāo)選擇與政策優(yōu)化)[J].Issues in Agricultural Economy(農(nóng)業(yè)經(jīng)濟(jì)問題),the 3rdissue of 2004

[3]LI HZ(李煥彰),et al.Analysis on the relationship between financial support in agriculture policy and China agricultural growth from the perspectives of cause and effect and structure(財(cái)政支農(nóng)政策與中國農(nóng)業(yè)增長:因果與結(jié)構(gòu)分析)[J].Chinese Rural Economy (中國農(nóng)村經(jīng)濟(jì)),the 12thissue of 2004.

[4]HE ZG (何振國),WANG Q (王強(qiáng)).The priority ranking of financial support in agriculture(財(cái)政支農(nóng)支出優(yōu)先次序研究)[J].Economic Research Journal(經(jīng)濟(jì)研究),2005(1):27-37.