Abstract

This article applies frontier production function analysis to small farms in Nicaragua during 1998-2005 (Battese and Coelli, 1988). The objective of this study is to estimate an average function that will provide a picture for the shape of the organic fertilizer technology of an average firm (in our case, agricultural production units). Furthermore, a best-practice scenario for organic fertilizer against which the efficiency of the firms within the primary sector can be measured is presented (Coelli, 1995). The results show an acceptable average of technical efficiency which the makers of public policy in Nicaragua a must consider for the future. This is imperative if we consider economy activity indexes that have increased during this period.

Key words: Technical efficiency, LSMS, organic fertilizer, small farm, panel data.