New Zealand Journal of Crop and Horticultural Science

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Determinants of economic efficiency: A case study

of hazelnut (Corylus avellana) farms in Samsun
Province, Turkey

Osman Kilic , Vedat Ceyhan & Isil Alkan

To cite this article: Osman Kilic , Vedat Ceyhan & Isil Alkan (2009) Determinants of
economic efficiency: A case study of hazelnut (Corylus�avellana) farms in Samsun Province,
Turkey, New Zealand Journal of Crop and Horticultural Science, 37:3, 263-270, DOI:
10.1080/01140670909510272

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New Zealand Journal of Crop and Horticultural Science, 2009, Vol. 37: 263-270
1175-8783 (Online); 0014-0671 (Print)/09/3703-0263 © The Royal Society of New Zealand 2009
Determinants of economic efficiency: a case study of hazelnut
(Corylus avellana) farms in Samsun Province, Turkey
OSMAN KILIC
VEDAT CEYHAN
Department of Agricultural Economics
Faculty of Agriculture
Ondokuz Mayis University
Samsun, Turkey
email: okilic@omu.edu.tr
ISIL ALKAN
Department of Economics
Faculty of Economics and Administrative
Sciences
Ondokuz Mayis University
Samsun, Turkey
Abstract The purposes of this research were to
measure the cost efficiency of sample hazelnut
(Corylus avellana) farms and to explore determinants
of economic efficiency in the eastern Black Sea
region of Turkey. Data envelopment analysis (DEA)
was used to estimate efficiency measures of sample
farms. Farm managers from 151 randomly selected
farms were interviewed for farm-level data between
production periods in 2005 and 2006. Research
results revealed that inefficient hazelnut farms
would have needed to lower production costs by
44% to perform as well as other similar best practice
farms. The analysis of the measures of technical
efficiency showed that pure technical inefficiency
was the primary cause of technical inefficiency. The
results also showed that one of the most important
positive factors in economic efficiency was sucker
control. The age and education level of operators
and credit use were the other influencing factors in
economic efficiency. Strategies for a better farm-
level education, farm extension programmes focused
on sucker control, and providing farmers with greater
access to credit may help to increase economic
efficiency of hazelnut farms.
H08058; Online publication date 31 August 2009
Received 19 May 2008; accepted 9 June 2009
263
Keywords cost efficiency; data envelopment
analysis; hazelnut farms; determinants of
efficiency
INTRODUCTION
Although hazelnut (Corylus avellana L.) is pro-
duced in many countries around the world, few
countries have production levels that affect world
hazelnut markets. Turkey, Italy, the United States,
and Spain produce the majority of hazelnuts for
export. These four primary hazelnut producers
share c. 90% of world hazelnut production.
Turkey accounts for 70% of world hazelnut
production/export and is the authority in hazelnut
markets (FAO 2007).
Hazelnut has always taken first place as an
export crop among agricultural products in Turkey.
It provides substantial foreign exchange earnings,
and has social and economic importance for
producers in hazelnut cultivation areas. Particularly
in provinces on the east Black Sea coast of Turkey,
the basic income source for most farmers is hazelnut
production. The increase in production by other
hazelnut producing countries will continue to reduce
Turkey's export advantage. As a consequence,
Turkey must decrease the costs of production and
raise product quality to the level desired by export
markets. To reduce the costs of hazelnut production
and increase yields, input use must become more
efficient. Therefore, research on the efficiency of
hazelnut farms and its determinants is vital for
sound policy recommendations and redirection of
managerial actions.
Many earlier studies of technical efficiency in
agriculture have focused on crop and livestock farms
by using the production function, the parametric or
non-parametric frontier function, and mathematical
programming with cross-sectional, panel, or aggre-
gate data (Sidhu 1974; Kalirajan & Flinn 1983;
Banker et al. 1984; Squires & Tabor 1991 ; Pinherio
1992; Battese et al. 1996; Laura Gow & Langemeier
1999; Tzouvelekas et al. 2001; Latruffe et al. 2002;
264 New Zealand Journal of Crop and Horticultural Science, 2009, Vol. 37
Helfand 2003). Similarly, efficiency analysis has been
applied relatively little in Turkey. There have been
some studies on efficiency in Turkish agriculture
(Gunden et al. 1998; Zaim & Cakmak 1998; Akturk
2000; Demirci 2001; Cinemre et al. 2006; Cinemre
& Ceyhan 2006; Ozcelik et al. 2006), but there has
thus far been no study carried out by applying data
envelopment analysis (DEA) to hazelnut farms.
Therefore, the objectives of this paper were to calculate
farm level efficiency measures and to evaluate the
determinants of cost efficiency in hazelnut farms in
the Black Sea Region, Turkey.
MATERIALS AND METHODS
DEA model for hazelnut farms
Data envelopment analysis (DEA) was used to
calculate efficiency measures. DEAis one of several
techniques that can be used to calculate the best
practice production frontier (Coelli et al. 1998;
Kumbhakar & Lovell 2000). Thanassoulis (2001)
pointed out that further detailed analysis and possibly
inspection of the best and the worst performers are
then necessary to understand the production process
and derive useful information that may help both
the worst and the best performers to make further
improvements in efficiency. The DEA approach
provides an analytical tool for determining effective
and ineffective performances.
Efficiency is defined in this research in a relative
sense as the distance between observed input-output
combinations and the best practice frontier. The
Farrell input-oriented measure of efficiencies was
used as a measure of efficiency since farms tend
to have a greater control over their inputs than
over their outputs. Farrell (1957) proposed that the
efficiency of a firm consists of two components:
(1) technical efficiency, which reflects the ability
of a firm to obtain maximal output from a given
set of inputs; and (2) allocative efficiency, which
reflects the ability of a firm to use the inputs in
optimal proportions, given their respective prices
and the production technology. These two measures
are then combined to provide a measure of cost
efficiency (also called economic efficiency). The
Farrell measure equals 1 for farms on the efficiency
frontier, and then decreases with inefficiency.
We constructed a DEA model assuming that each
hazelnut farm produces a quantity of hazelnut (y,)
using multiple inputs (x,) and that each farm (i)
is allowed to set its own set of weights for both
inputs and output. The data for all farms are denoted
by the K x TV input matrix (X) and M x TV output
matrix (Y). Using piece wise technology, an input-
oriented measure of technical efficiency (TE) can be
calculated for the i-th farm as the solution to linear
programming (LP):
Minimise,^ 8
Subject to -_y, + YA>0 (1)
8x,. - Xk > 0
X>0
where 8 is the technical efficiency score having a
value 0<8<l. If the value equals 1, the farm is on the
frontier; the vector X is an TV x 1 vector of weights
that defines the linear combination of the peers of
the i-th farm.
The input-based minimum cost for the i-th
farm can be obtained by solving the following LP
problem:
Minimise^,.,wTj x*
Subject to -_y, + YÀ>0 (2)
x* -Xk>0
where w, is a vector of input prices for the i-th hazelnut
farm; superscript T is the transpose function; x* is
the cost-minimising vector of input quantities for the
i-th hazelnut farm calculated by the LP, given the
input prices wj and output level y:, and A is a TV x 1
constant vector. Equation 1 and Equation 2 represent
the cost minimisation under constant returns-to-
scale (CRS) technology. CRS means that output
increases in proportion to changes in all inputs. The
economic efficiency (EEt CRS) of the i-th hazelnut
farm is calculated as:
x,. (3)
That is, EEiCRS is the ratio of the minimum cost
to the observed cost, given input prices and CRS
technology (Coelli et al. 1998).
Coelli et al. (1998) pointed out that the CRS model
is only appropriate when the farm is operating at an
optimal scale. Factors such as imperfect competition
and financial constraints may prevent a firm from
operating at optimal scale. Since hazelnut farms in
the research area conducted their activities under
imperfect competition, and because the size of many
hazelnut farms made them ineligible for institutional
loans, we transformed Equation 1 to the variable
returns-to-scale (VRS) technology model by adding
the convexity constraint NYK = 1, where ATI is an
TV x 1 vector of ones and X is an TV x 1 vector of
Kilic et al.—Determinants of economic efficiency
constant to Equation 1. In this example, the TE
scores under VRS was calculated using Equation 1,
with the convexity constraint added to decompose
the technical efficiency scores into two components:
"pure technical efficiency" (PTE), which reflects
the ability of a firm to obtain maximal outputs at an
optimal scale; and "scale efficiency" (SE), which
reflects the distance of an observed firm from the
most productive scale size. Scale efficient farms
are of appropriate size and thus do not need to be
reorganised to improve output or earnings. Scale
efficiency was calculated as the ratio of the technical
efficiency score of the farm under CRS technology
to the technical efficiency score of the farm VRS
technology. Farms were classified as scale efficient
if the SE = 1 or if the TEVRS = TECRS. Farm-level scale
inefficiency was determined by comparing technical
efficiency score under non-increasing returns to
scale (MRS) with the technical efficiency score
under CRS. If SE < 1 and TENIRS = TECRS, farms were
classified as scale inefficient owing to increasing
returns to scale (1RS). If SE < 1 and TENIRS > TECRS,
farms were classified scale inefficient owing to
decreasing return to scale (DRS). The allocative
efficiency was calculated residually by:
AE^EE^ITE, (4)
In this study, the two-stage approach was preferred
in assessing the influence of various factors upon
inefficiency because of several advantages (e.g., prior
assumptions are not required regarding direction
of influence, accommodation of more than one
variable with continuous or categorical variables).
A Tobit regression of inefficiencies on potential
determinants was used because the inefficiency
scores are truncated at 0 and 1. The Tobit model is
specified as follows:
yt = (5)
0 if y* < 0
y* = ßx, JV(O, a2)
where yt is the measure of economic efficiency
for farm i, y* is the unobservable variable, xt are
explanatory variables that influence the economic
efficiencies of the farms, and ß and u are parameters
of the model and the random error term, respectively
(Greene 2000).
For statistical analysis, SPSS statistical package
was used. Efficiency scores were measured using
DEAP 2.1. The LIMDEP program was used to
estimate the effects of explanatory variables on
economic efficiency scores.
265
Data
This study, after identification of survey objectives,
used a well-designed state-of-the-art instrument
to capture information that is of great interest and
relevance to the questions under study. During the
sampling process, following identification of the
study population, the sample frame was defined and
sample size was determined by the simple random
sampling method (Yamane 1967). We used a 90%
confidence level and 10% precision level when
determining optimum sample size. Random numbers
generated from a random number table were used to
select farms from the population. Using a structured
survey of 151 hazelnut farms selected by random
sampling, we collected the input-output data used in
this study during the production year of 2005-06.
The cost efficiency of hazelnut farms was
modelled in a six-input, single output framework.
Quantity of hazelnut produced in 2006 was used to
measure output (kg/year). Six inputs were used for
cost efficiency analysis: working capital (us$/year;
1 us$ =1.6 Turkish liras), labour (h), harvest costs
(us$/year), nitrogen (N) use (kg/year), phosphorus
(P) use (kg/year), and orchard size (ha). Other
data collected were demographic characteristics
of farmers, farmer characteristics, and hazelnut
production characteristics.
The sample hazelnut farms produced 2.7 t/year,
on average. The minimum hazelnut production was
0.5 t and the maximum was 12 t. To reach their
present level of production, hazelnut farms used
c. US$8500 of working capital, 3.21 h labour, and
350 kg fertiliser, mostly in N. In addition, sample
farms paid c. US$1800 for harvesting hazelnuts. In
efficiency analysis, we assumed that all farms faced
the same relative price for labour, N and P, land, and
capital. Costs of labour, N and P, land, and capital
were us$1.54/h, us$0.25/kg, us$0.35/kg, US$1369/
ha, and us$0.10 per us$, respectively.
We included in Table 4 the descriptive statistics
of variables such as hazelnut production, working
capital, hazelnut yield, labour use, N and P use
associated with returns to scale.
The variables included in the tobit analysis can
be divided into three groups: personal characteristics
of farmers (the age and education level of farm
operators, and family size); farm characteristics
(farm size, the number of plots, hazelnut orchards/
total farmland, credit use), and hazelnut production
characteristics (the age of hazelnut orchards, location
of orchards, varieties, sucker control, the share of
family labour, and marketplace). The variables of
location of orchards, variety of hazelnut, and sucker
266 New Zealand Journal of Crop and Horticultural Science, 2009, Vol. 37

control were represented in the model by a dummy RESULTS AND DISCUSSION

variable, whereas the variable of marketplace
represented by a proxy variables in the model are
merchant, factory and cooperatives.
In the research area the education level of farm
operators is generally low and their average age is
52. On average, they produce hazelnuts in 3.17 ha
of land that constitutes 91% of the total farmland
with a four-person family. The share of family labour
had a mean of 0.64 with a standard deviation of
0.28. Farmers used US$1093.85 of credit on average
in a year for hazelnut production. Concerning the
production characteristics, the mean age of the
hazelnut orchards is 52. Most of the hazelnut
orchards are located in highlands and most farmers
preferred to grow mixed varieties in the research
area. Sixty-three percent of the farmers practice
sucker control. After the harvesting period, many
farmers had a preferred merchant to market their
hazelnuts (Table 1).
The sample hazelnut farms have similar characteristics
to average Turkish hazelnut farms. The mean farm
size is c. 3.5 ha in the sample hazelnut farms, whereas
that of the average Turkish hazelnut farms is 3 ha.
The number of plots in the sample hazelnut farms
is somewhat lower than that of the Turkish hazelnut
farms. The share of hazelnut orchards in the total
farmland for the sample and average Turkish hazelnut
farms is 49% and 94%, respectively. The number of
tractors is higher in the sample farms. However,
the family size is lower than the average Turkish
hazelnut farm. For yield, the sample hazelnut farms
are more productive compared with the average
Turkish hazelnut farms (Table 2).
Based on the results of efficiency analysis, overall
economic efficiency of hazelnut farms ranged from
0.13 to 1. The average was 0.56 with a standard
deviation of 0.20 (Table 3). On average, inefficient
farms would have needed to lower fertiliser,

Table 1 Descriptive statistics of input and output measures and factors influencing efficiency for a sample of hazelnut
farms.

Variable Mean SD Min. Max.

Efficiency analysis
Hazelnut production (kg/year) 2754.70 1953.46 500.00 12000.00
Working capital (us$/year) 8451.52 11643.34 107.69 90615.38
Labour (h) 3.21 1.24 1.25 6.50
Harvest cost (us$/year) 1756.38 1339.60 261.54 6153.85
Nitrogen (kg) 251.00 201.87 21.00 1300.00
Phosphorus (kg) 99.23 227.81 0.00 1325.00
Hazelnut orchards size (ha) 3.17 2.06 0.72 12.00
Tobit model
Personal characteristics
Age of farm operators (years) 51.78 10.97 27.00 75.00
Education level of farm operators (in years) 6.62 2.78 1.00 15.00
Family size (person) 4.37 1.59 2.00 8.00
Farm characteristics
Farm size (ha) 3.48 2.38 0.72 13.3
No. of plots (unit) 2.49 1.70 1.00 10.00
Hazelnut orchards/total farmland 0.91 0.16 0.09 1.00
Credit use (us$/year) 1093.73 2664.85 0.00 18461.54
Hazelnut production characteristics
Age of hazelnut orchards (years) 51.78 10.97 27.00 75.00
Location of orchards* 1.46 0.50 1.00 2.00
VarietiesT 1.70 0.46 1.00 2.00
Sucker control 1.15 0.35 1.00 2.00
Share of family labour 0.64 0.28 0.00 1.00
Marketing place§ 1.34 0.76 0.00 3.00
'Dummy variables: (1) if the orchard is located on the plain; (0) if the orchard is located in the highlands.
îDummy variables: (1) if farmers grow one variety in orchards; (0) if farmers grow mixed varieties in orchards.
tDummy variables: (1) if the sucker control is done; (0) if the sucker control is not done.
§
Proxy variable and 1, 2, and 3 reflects merchant, factory, and cooperatives, respectively.
Kilic et al.—Determinants of economic efficiency 267

harvesting and labour costs by 44% to perform
as well as other similar, best practice farms in the
sample.
Efficiency measures for sample hazelnut farms are
presented in Table 3. In the research area, the primary
source of economic inefficiency was allocative.
Almost 93% of the sample hazelnut farms were
allocatively inefficient. These farms used the wrong
input mix given input prices, so that their costs
were 34% higher than the cost-minimising level.
The estimated technical efficiency measures for the
sample of hazelnut farms varied from 0.52 to 1.0,
with a sample average of 0.85. This result indicated
that the hazelnut farms could reduce their input use
by 16% without output reduction. Fifty-eight percent
of the sample farms had a higher technical efficiency
coefficient than the mean technical efficiency.
The analysis of the measures of technical
efficiency showed that pure technical inefficiency
was the primary cause of technical inefficiency. The
mean pure technical efficiency was 0.67. The mean
scale efficiency was 0.79, with a standard deviation
of 0.169 (Table 3). Individual analysis of the farms
indicated that 10% of the sample hazelnut farms
had constant returns to scale (CRS), whereas the
percentages of hazelnut farms exhibiting increasing

Table 2 Mean value of some comparative characteristics for the average Turkish
hazelnut farm and sample hazelnut farm. (Average Turkish hazelnut farm was
based on the results of Turkstat (2006), Fiskobirlik (2006), and Anon. (1992).)

Average Turkish Average sample

Characteristics hazelnut farm hazelnut farm
Farm size (ha) 2.95 3.48
Hazelnut orchard size (ha) 1.45 3.17
No. of plots 3.03 2.40
Hazelnut yield (kg/ha) 858 867
% of farms with tractor 0.18 0.31
Family size (person) 5.86 4.37

Table 3 Efficiency measures for sample hazelnut farms.

Efficiency measures Mean SD Min. Efficient farms (no.)

Overall 0.557 0.203 0.125 6
Allocative 0.657 0.191 0.168 5
Technical 0.850 0.150 0.523 47
Pure technical 0.670 0.199 0.245 14
Scale 0.790 0.169 0.266 15

Table 4 Summary of returns to scale results. Different letters reflect the significance at the 5% level for difference
between returns to scale. (1RS, increasing return to scale; CRS, constant returns-to-scale; DRS, decreasing return to
scale.)

Hazelnut Working Hazelnut Nitrogen Phosphorus

No. of production capital Labour use yield use use
farms (kg/year) (us$/ha) (AWU) (kg/ha) (kg/ha) (kg/ha)
1RS 127 2220.51» 3584.25» 3.12s 849.50s 79.65s 32.73s
CRS: 15 4946.67" 4365.45" 3.10a 1260.60" 76.94s 12.08s
DRS 9 6555.56C 1855.29»" 4.75" 966.80s 78.84" 43.27"
268 New Zealand Journal of Crop and Horticultural Science, 2009, Vol. 37

returns to scale (1RS) and decreasing returns to scale
(DRS) were 84% and 6%, respectively (Table 4).
The 15 scale-efficient hazelnut farms had larger
hazelnut production compared with the hazelnut
farms having 1RS. In addition, scale-efficient farms
used less labour per year, less N and P per ha, and
more working capital than inefficient ones (P <
0.05). Therefore, scale-efficient farms obtained more
hazelnut yield compared with inefficient farms (P <
0.05) (Table 4).
Table 5 represents results of the tobit model on
the relationship between economic efficiency and

Table 5 Results of the Tobit analysis: efficiency determinants.

Estimated
Variable coefficient SE P [1 Z 1 > z]
Personal characteristics
Age of farm operators (years) 0.43 0.17 0.0130
Education level of farm operators (in years) 0.56 0.16 0.0055
Family size (person) 0.14 0.12 0.2523
Farm characteristics
Farm size (ha) 0.26 0.16 0.9843
No. of plots (unit) -0.34 0.15 0.0130
Hazelnut orchards/total farmland 0.51 0.98 0.6065
Credit use (us$/year) 0.49 0.12 0.0100
Hazelnut production characteristics
Age of hazelnut orchards (years) 0.32 0.21 0.8809
Location of orchards 0.32 0.50 0.5198
Varieties 0.61 0.31 0.8448
Sucker control 0.78 0.45 0.0805
Share of family labour 0.82 0.63 0.1935
Marketing place 0.55 0.22 0.8017
Log likelihood 37.08 0.0000

Table 6 Differences between economically efficient and inefficient hazelnut farms. (Figures in parentheses are
SEs.)

Economically efficient Economically i nefficient

Characteristics farms (n = 6) farms (n =145) P [1 Z 1 > z]
Personal characteristics
Age of farm operators (years) 59.67 (12.37) 51.46(10.83) 0.753
Education level of farm operators (in years) 7.50 (2.95) 6.59 (2.77) 0.491
Family size (person) 4.83 (1.72) 4.35 (1.59) 0.470
Farm characteristics
Farm size (ha) 2.75(3.17) 3.51(2.12) 0.972
No. of plots (unit) 1.50 (0.84) 2.71 (1.74) 0.092
Credit use (us$/year) 1666.67 (4082.52) 993.10(2608.52) 0.236
Total asset (1000 us$/year) 79.92 (95.39) 71.42 (71.90) 0.780
Working capital (1000 us$/year) 16.75 (36.22) 8.11(9.62) 0.075
Labour (AWU) 3.79 (1.29) 3.19(1.24) 0.251
Harvest cost (1000 us$/year) 1.75 (13.22) 1.98(1.85) 0.667
Nitrogen (kg) 69.40 (63.99) 79.56 (63.86) 0.722
Phosphorus (kg) - 32.60 (73.07) 0.000
Share of family labour - 0.83 (0.39) -
Hazelnut production characteristics
Hazelnut orchards size (ha) 2.75 (2.82) 3.19(2.02) 0.384
Age of hazelnut orchards (years) 50.83 (9.70) 40.14(10.15) 0.498
Hazelnut production (kg/year) 4725.00 (4472.56) 2667.97 (1757.43) 0.010
Hazelnut yield (kg/ha) 1369.60 (436.72) 877.82 (291.63) 0.000
Kilic et al.—Determinants of economic efficiency
its determinants. Most signs related to efficiency
determinants were as expected. All variables
evaluated under farm characteristics were positive,
with the exception of number of plots. The credit
use coefficient was positive, which indicated that the
farms that used more credit were more efficient than
the lower ones (P < 0.01). The coefficient of plot
number indicated that hazelnut farms having smaller
plots were more efficient than others (P < 0.05). The
variables of share of family labour, farm size, and
share of hazelnut orchards in farmland were also a
positive sign. However, they were not statistically
significant (P > 0.10).
The variables of the education level and age
of the operator indicated that more educated and
older operators were more efficient (P < 0.05). The
variable of family size had negative effects ; however,
it was statistically insignificant (P > 0.10).
All the coefficients of the hazelnut production
characteristics group were not statistically significant
(P > 0.10), with the exception of sucker control.
All insignificant variables positively influenced
the economic efficiency. The estimated coefficient
for sucker control indicated that increasing sucker
control led to more economically efficient farms (P
<0.10).
Based on the results of the comparative efficiency
analysis, the economically efficient hazelnut farms
carried out their activities on a smaller number of
plots with a relatively high level of working capital.
However, their P use was lower than on inefficient
farms. In addition, farmers on economically efficient
farms were better educated and more experienced.
Efficient farms also had higher hazelnut production
and hazelnut yield/ha (Table 6).
CONCLUSION
DEA was used to calculate efficiency measures and to
determine the factors affecting economic efficiency
in Samsun hazelnut farms. The mean technical,
allocative, and economic efficiencies for hazelnut
farms were 0.85,0.66, and 0.56, respectively. Of 151
farms included in the analysis, 47 were technically
efficient, 5 were allocatively efficient, and 6 were
economically efficient. Analysis of technical
efficiency showed that most of the hazelnut farms
were both operationally and scale inefficient. Most
hazelnut farms could become more efficient by
adjusting input use and operation scale.
The most important determinant of economic
efficiency was sucker control. The age and education
269
level of operators and credit use were other
determinants of economic efficiency. Strategies for
a better farm-level education and farm extension
programmes focused on sucker control may help to
increase efficiency. Farmer training and extension
activities are relatively low-cost methods of achieving
increases in productive efficiency. However, such
increases strongly depend on the effectiveness
of the presentations by research and extension
organisations. Turkey's Ministry of Agriculture
and Rural Affairs (MARA) has tried to prepare
and implement extension and training programmes
throughout the country, including the research area.
Branches of some input sales companies have also
contributed by transferring information to hazelnut
farmers. However, the efficiency of such efforts is
still unsatisfactory owing to bureaucracy, limited
investment, insufficient numbers of skilled extension
persons, and information gaps on technical and
economic aspects of hazelnut farming. Training
focusing on sucker control and cultural practices
may help increase efficiency in this research area.
In addition, encouragement of young rural people
to stay in agriculture might have beneficial effects
on economic efficiency. Providing farmers with
greater access to credit would require government
support through legal and regulatory frameworks.
Although the Turkish government has given an
interest rate subsidy to all farmers, Kilic et al.
(2005) reported that hazelnut farmers did not use
this credit because of high transaction costs. Thus, a
government-supported pilot programme that reduces
the transaction costs of providing credit to farmers
would have the potential to increase efficiency. Such
a credit programme could help farmers expand their
facilities from small-scale to modern facilities and
benefit from economies of scale, which may also
increase economic efficiency.
ACKNOWLEDGMENTS
We thank anonymous referees for their constructive
comments and suggestions. We acknowledge Ondokuz
Mayis University, Turkey for financial assistance.
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