Decomposition of Total Factor Productivity Growth of Pistachio Production in Rafsanjan Region of Iran

The stochastic frontier production model is one of the most used ways to estimate efficiency and productivity. The purpose of this paper was to decompose the sources of total factor productivity (TFP) growth into technological progress, changes in technical efficiency and changes in economies of scale. In this paper, we also used Divisia index in order to estimate production function. A random sample of 298 farmers selected from Rafsanjan Township for three years, 2004, 2005 and 2006, which was a larger data set with a wider spatial coverage than used in previous studies of pistachio production. Sampling approach of this paper was "Two stage cluster sampling" and the data for outputs and inputs were obtained during 2007 and the spring and summer of 2008, by filling questionnaires and interviewing 298 farmers in the region. Results showed that technological progress includes the majority of TFP growth, but that differences in efficiency change explained cross-region differences in TFP growth. Efficiency in the 19 contiguous regions averaged 52.52% from 2005 to 2007. Experience and firm size were both positively associated with efficiency, whereas age, education and farm size, were negatively associated with efficiency.