  In this paper, we develop a two-stage analytical framework to investigate
farming efficiency. In the first stage, data envelopment analysis is employed
to estimate the efficiency of the farms and conduct slack and scale economies
analyses. In the second stage, we propose a stochastic model to identify
potential sources of inefficiency. The latter model integrates within a unified
structure all variables, including inputs, outputs and contextual factors. As
an application ground, we use a sample of 60 farms from the Batinah coastal
region, an agricultural area representing more than 53 per cent of the total
cropped area of Oman. The findings of the study lay emphasis on the
inter-dependence of groundwater salinity, irrigation technology and operational
efficiency of a farm, with as a key recommendation the necessity for more
regulated water consumption and a readjustment of governmental subsidiary
policies.
