Economic Inefficiency and Shadow Prices of Inputs: The Case of Vegetable Growing Farms in Uzbekistan

This article was devoted to an overall estimation of the economic inefficiency of the sample of vegetable growing farms in Uzbekistan. Because our analysis is based at the farming system level, we have been able to estimate the allocative (price) inefficiency of vegetable producers. Another significant finding of this study is that we have shown the economic inefficiency of each input under consideration. We have also applied a technique that calculates shadow prices of land and labor (for which no price information was available) using existing price information for diesel input under existing production inefficiencies. We found relatively large inefficiencies in the production of vegetables, both technical and allocative, whereas technical inefficiency played a relatively major role in overall inefficiency. As the model's results show, seed is economically the most inefficiently used input in producing vegetables. We found a possible cost savings if farms followed best-practice farm groups, which were used for the construction of frontier.