MEASURING QUALITATIVE RESPONSE OF THE MOST IMPORTANT FACTORS AFFECTING THE ECONOMIC EFFICIENCY OF RICE FARMS IN NAJAF GOVERNORATE SEASON 2017

79 MEASURING QUALITATIVE RESPONSE OF THE MOST IMPORTANT FACTORS AFFECTING THE ECONOMIC EFFICIENCY OF RICE FARMS IN NAJAF GOVERNORATE SEASON 2017 R.T. Al-Wasity Z. H. Mahmood S. H. Ali Assist. Prof. Assist. Prof. Lecturer Department of Agricultural Economics College of AgricultureUniversity of Baghdad Um_zeina@yahoo.com ABSTRACT This study aimed to estimate rice farms efficiency using qualitative response models. The survied field included three districts in Najaf (Al Mishkhab, Al Hirah, Al Manadhira) during agricultural season 2017, including a random sample of 80 farms, representing 7.5% of the total farms. To achieve the goals, analysis was divided into two stages, the first stage was measuring the economic efficiency according to entry guidance of rice farms, while the second stage involved the analysis of factors affecting the economic efficiency of rice farms using the binomial logistic regression model to obtain a mathematical relationship between the dependent variable (response variable), which represents the economic efficiency of rice farms and the independent variables represented by age, experience and education of the owners , geographical area and type of possession for the farms. DEAP software was used to estimate economic efficiency and SPSS software to analyze the logistic regression of the factors affecting economic efficiency. The results showed that the average economic efficiency according to the Economic efficiency was 66.7%, which means that rice farmers can obtain the same production using 66.7% of the total costs i.e. there is a 33% waste in economic resources in the research sample.The logistic regression results indicated that each of experience (more than 35 years), education (university degree) and farm area (greater than 15 dunums) had a significant effect on the efficiency of the rice crop farms.


INTRODUCTION
Several developing countries, including Iraq, suffer from predominance of family farm pattern with a misuse of available resources. This leads to low economic efficiency of farms, which is an important issue in the development of agriculture, especially in developing countries. When farmers are inefficient in their practice, there will be a decrease in agricultural production with increased costs (7). The problem lies in the rate of growth of resources discovered or eligible for use as one of the productive factors, because it is much lower than the growth of population and their needs. Furthermore, Najaf farmers usually lack the optimal use of the economic resources. Therefore, the productive firms seek to reallocate resources for the purpose of achieving economic efficiency by mixing the elements of production and obtaining the largest amount of output. The importance of efficiency lies in the principle of making use of resources at the lowest cost, especially for the rice crop, as it is one of the main crops in the world and ranks second after the wheat crop in terms of cultivated areas. Rice is grown at Iraq mainly in the areas of the Euphrates basin, especially the Najaf governorate, which is one of the most famous provinces in Iraq to grow rice, due to the climate, the quality of the soil for cultivation and the availability of irrigation water (22). The importance of the rice crop comes from being a major food crop that many Asian people depend on as a staple food, so it is an essential food for more than half of the world's population, and an important source of energy, given that it contains relatively high amounts of carbohydrates, protein, fibre, minerals and vitamins. Studies show that 100 g of the rice crop contains (11.67) protein g, (3.33) g fat, (66.67) g carbohydrates, (8.3) g fiber, (0.99) g iron, and finally (0.83) g of saturated fatty acids (5) . In addition, rice residues are rich in vitamins and proteins and can be used for animal feed.
Rice farms suffer from productive, technical and administrative problems that result in a decrease in their efficiency. This may be at least partly attributed to weak management and their failure to carry out the duties assigned to them and not taking modern management concepts that enable them to achieve their goals efficiently and effectively. The results will be a waste in the use of some resources and an increase in costs and a decrease in profits making some farms operate with a low production scale. The importance of research lies by identifying a group of factors that play an important role in deviating efficiency, especially when the variables are qualitative. The local, Arab and international studies have focused on studying the qualitative response (1,2, 4,13, 15,17 ,19 ,18 , 23, 24, 25) and the economic efficiency thereof (16,26). Therefore, the current study aimed to estimate the measurement of the economic efficiency of rice farms in Najaf for season 2017 using the Data Envelopment Analysis (DEA) model, and to study the impact of the most important factors affecting the efficiency of rice farms using qualitative response models. The research is based on the hypothesis that there are factors that affect the efficiency of farms and cannot be quantified, especially with regard to farm management factors. As such, the use of qualitative response models results in the estimation of accurate and logical parameters.

MATERIALS AND METHODS Data collection:
The study depended on the primary data obtained from its sources. The data were collected through a personal interview with farmers in Najaf Governorate. The field survey included three districts in Najaf Governorate (Al-Mishkhab, Al-Hirah, Al-Manadhira) using a questionnaire for 80 rice farmers (representing 7.5% of the total farms) in study region .

Data analysis
To achieve the research goals, the analysis was divided into two stages. The first stage was to measure the economic efficiency of rice farms in Najaf using the Data Envelopment Analysis (DEA) model, which is one of the nonparametric programming methods to create an envelope or field containing data. As for the second stage, the research relied on an analysis of the factors affecting the economic efficiency of rice farmers, using a binomial logistic regression model. This model was used to obtain a mathematical relationship between the dependent variable (response variable), which represents the economic efficiency of rice farms and independent variable (The social characteristics of farmers) which includes age, experience, area, education, geographical area, and type of possession. The DEAP software was used to estimate economic efficiency while the SPSS software (version 25) was used analyse the logistic regression of factors affecting economic efficiency. Economic efficiency (EE): Farrell (1956) stated that the Efficiency of a firm consists of technical efficiency and allocated efficiency. The technical efficiency reflects the firm's ability to obtain the maximum amount of production using the available quantities of inputs, while the AL locative efficiency indicates the firm's ability to use the optimal mixture of inputs taking into account the prices of inputs and the available production techniques. According to Farrell, there are two methods for calculating efficiency indicators: the first is called efficiency indicator from the input side, and the second is from the output side. The first indicator is also called the input oriented measures, while the second is called the output oriented measures (12). Figure 1 represents the production map from the point of use for a firm that produces output Y using the inputs X 2 and X 1 under technical conditions characterized by the stability of economies of scale. Where SS represents the output of one unit of y with maximum efficiently using inputs X 2 , X 1 and AA ' is the cost curve equal to unit production.

Figure 1. Input data envelope analysis model
The SS curve represents the using points of perfect efficient for producing a unit of y product. Thus, the point P is less efficient than Q for producing one unit of Y and the distance PQ expresses the extent of the decrease in technical efficiency. It indicates the quantity by which all inputs can be reduced proportionally without reducing production. The technical efficiency index of the firm producing at point P on the OP ray is calculated as follows: The index takes the values 0-1, where the value 1 indicates the full technical efficiency of the firm. The slope of the straight line represents the relative price of the inputs. By knowing this slope, the index of the firm's allocative efficiency on the OP ray can be calculated as follows: The distance QR is the amount at which the unit cost of production of y unit can be reduced by allocating the inputs according point Q' instead of point Q. The economic efficiency of the firm is defined according to the following law: = =  = 

…….(3)
A firm that is characterized by cost efficiency uses prices that reduce costs, or uses productive techniques and technology that make costs at a minimum, and economic efficiency can be expressed by the following Where indicates the input prices, indicates the minimum input (the optimal level of input), and indicates the actual level of input (18).

Logistic regression model
The logistic regression model is one of the regression models in which the relationship between the dependent variable (y) and the independent explanatory variables (X) is nonlinear, and the response function often takes the form S shape (9). : represents the so-called odds ratio, which is the ratio of the probability of the occurrence and non-occurrence of an event.L: is the natural logarithm of the odds ratio.

RESULTS AND DISCUSSION
Estimation the economical efficiency of rice farmsThe economic efficiency of the research sample was measured, as resource prices were entered as well as the amount of resources. The results showed that the average economic efficiency of rice farms in Najaf for the production season 2017 for the research sample ranged between 37.3% and 100%, while the average economic efficiency was about (66.6%). This indicates that farmers in the research sample can increase their production by 33.3% without increasing the amount of economic resources used in production. Thus, farmers bear additional costs of about 33.3%, as economic efficiency implies that farmers can produce the same level of production in light of reducing production costs or reducing the amount of resources used. From the table also it was found that there is a variation in the level of economic efficiency between the sample farms and this is due to the difference in experience and management skills. In this regard, the results suggest that the farms achieving 100% economic efficiency are those farms in which the cost line is in contact with the equal output curve. In the present study, these were 4 farms and formed (5%) of the total number of research sample, while the rest farms whose production deviates from the optimal production potential curve in different proportion (table 1 and figure 2).  Table 2 shows the sample size distributed according to the basic research variables. The percentage of efficient farms in the research sample was 47 while the inefficient farms ratio was 33. Regarding farmer experience, 55.32% of efficient farms had long experience (greater than 35 years) farmers compared to only 17.02% of inefficient farms which had such experience farmers. As for the rice-growing areas, Al Mashkhab accounted for about 50% of the efficient and inefficient farms, followed by Al-Manathera by 31.19% in efficient farms compared to 24.24% in the inefficient farms. Ownership farms represented about three quarters of the efficient ones, while there were two farms 4.26% with contract and 19.15% are rented. the percentage of farms with private property in efficient farms than inefficient farms (76.6% versus 60.6%). Farmers with higher education accounted for 14.94% of the total farmers in the efficient farms compared to 6.06% in the inefficient farms. In contrast, the primary education rate was 69.69% in the inefficient farms which indicates the importance of education in raising economic efficiency through the optimal use of resources. As for the size of the farm, large farms (greater than 15 dunums) represented 44.68% of the efficient farmers, compared to 24.24% of the inefficient farmers. To study the relationship between the basic variables and the economic efficiency of farms, Chi square test was used, and the value of this test and the statistical significance (Pvalue) were compared and compared with the standard value (0.05). It is clear from the table (3) that there are statistically significant differences for the experience and education variables. The area was statistically significant at (0.10). Parameters of the logistic regression model were estimated by the maximum likelihood as an efficient method that required iterative methods to calculate (Enter) which were settled upon attempt 5 (21) . All explanatory variables entered into the model except for the age variable which was removed from the model due to its correlation with the experience variable. This step was taken to manipulate the problem of multiple linear correlation. Table 4 summarizes the parameters of the model, which includes the standard error, Wald statistics, degrees of freedom, and the significance of the Exp (B) parameters that we will explain after the model passes the diagnostic tests.

Diagnostic tests
To fully test the adequacy and quality of the model (Goodness of fit), the Log likelihood ratio, which follows the Chi-Square distribution (6), was used according to the following relationship≔ From table 5, that the value of (χ 2 ) was 27.141 at 8 degree of freedom, and the level of significance p-value = 0.001. That means the model is statistically significant and reconciles the data well, i. e. the variables included in the model have an effect, significance and contribution in farm efficiency for the sample included in the study. To measure the goodness of fit of the logistic regression model, Hosmer and Lemeshow (H) test was used (14) , which is calculated according to the following relationship: .…(8) The statistic (H) is distributed according to the distribution (χ 2 ) in m-2 degrees of freedom, and we note from the table (6) that the value of H-Statistic was 5.861, and p-Value for Chi-Square within the level of significance, which impose the acceptance of the null hypothesis (11). This implies goodness of fit of the model, i.e. the model is appropriate and fils well with the data. To assess the fit quality of the logistic regression model, two   ) whose value was 0.388, it explains approximately 38% of the explained variance in the logistic regression model.

Economic of analysis
From the estimated results in the table (4) the logistic regression function for the most important factor affecting the economic efficiency of the rice crop takes the following form: The equation was expressed as ' '. of note, the results were explained as (27). which represents the odds ratio (OR). This ratio indicates the magnitude of change in the efficiency according to the change in the independent variable associated with B. Table  4 shows that the estimated value of the experience variable is positive (1.237), and the Wald statistic (4.267) points out the level of significance (0.039) of the estimated parameter. This indicates the importance of the experience factor on the efficiency of rice farms, while odds ratio (Exp ()) for the parameter (3.445> 1) implies farmers having more than 35 years of experience increase the probability of a farm's efficiency by 3.446time compared to farms managed by farmers with less than 35 years of experience. The accumulated experience enables farmers to use good types of production requirements, and the farmer is familiar with the agricultural processes necessary for growing and harvesting the crop. Furthermore (8), the experience gives the farmer the required skill for managing the farm as well as a future view of the input prices and the selling prices of the crop. Therefore, the experience has a positive impact on increasing probability of economic efficiency. Concerning the areas where rice is grown, the Wald statistics for Al-Herra and Al-Manathera (0.075 and 0.086, respectively) which were not significant. Thus, area of cultivation has no significant effect on the economic efficiency of the study sample farms. Likewise, the Wald statistics for rented and contracted farms (1.282 and 1.081, respectively) were not significant. It is worth noting that private ownership may have a positive impact on the farm by providing a surplus of capital through which the farmer can purchase seeds and fertilizers of good quality as well as financing part of the production requirements without resorting to borrowing and incurring financial benefits (3). As such the private property renders farmer with no much fixed costs. On the other hand, the education parameter was significant, as the value of Wald (5.255) reached a significant level (0.022), which indicates the importance of education in raising the economic efficiency of the farm. The odds ratio (4.541) indicates that farm management holds having a higher degree associates with an increase in the economic efficiency of rice farms by 4.54-time compared to the farms administrated by a manager with primary level education. This indicates that farmers with higher education will be more able to apply modern science and technology, marketing and management experiences which increase the possibility of economic efficiency of the farm. As for the area, the value of Wald was (3.623) with a significant level (0.05), and the odds ratio was (3.33), which means that when the farm area is greater than 15 dunums, this may increase the probability of a farm's efficiency by 3.33-time compared to farms with an area smaller or equal than 15 dunums. It was well-established that farms with large areas have a greater ability to invest and use modern technology with a reduction in production costs. Thus, an increase in the potential for efficient farms will be more probable. We can conclude from the current study that there is no optimal exploitation of the available resources as farmers can increase their production by 33.3% without an increase in economic resources, and that each of long experience, higher education of farm administrative and large areas contribute significantly to increasing the efficiency of the farm. Therefore, the study recommends for optimum utilization of productive resources, especially in large areas of the rice cultivation. Also, to achieve economic efficiency, the study recommends using experienced administration with high education level through which automated work is used, such as the mechanical transplant method and the use of high-yielding varieties, beside increasing cultivated areas. Further studies for expanding the use of qualitative response models are needed as this model is an effective method to have an idea about the impact of the independent variables on the dependent variable.