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Factors Causing Technical Efficiency Variations of Rice Production by Member and Non-member Farmers of Cooperative Societies in a Selected Area of Bangladesh

Nurunnaher
Department of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh

K. M. M. Rahman
Department of Agricultural Statistics, Bangladesh Agricultural University, Mymensingh

M. H. Ali
Department of Cooperation and Marketing, Bangladesh Agricultural University, Mymensingh

Abstract/ Executive Summary:

The present study aims at analyzing the factors causing technical efficiency variations for the production of rice in a selected area of Bangladesh for to farmer groups of cooperative societies using Cobb-Douglas stochastic frontier and technical inefficiency effect models. It is based on the primary data collected from five Krishak Samabaya Samity (KSS) under the Upazila Central Cooperative Association (UCCA) at Fulbaria upazila of Mymensingh district The factors in the stochastic production frontier, which have positive impact on rice production are area, human labour, fertiliser, manure, tractor cost, education and experience. Area is found to have positive impact on technical inefficiency effect for Boro rice and negative impact on Aus rice production. The mean technical efficiencies are 84%, 79%, 98% for member farmers, and 88%, 96% and 98% for non-member farmers for Boro, Aus and Aman rice, respectively. Non-member farmers are found to be technically more efficient than member farmers.

Keywords: Technical efficiency, Cobb-Douglas stochastic frontier production function, Technical inefficiency effect model

Location: Mymensingh

Start Date: 15-07-2000

End Date: 23-12-2002

Program Area: Socio-economic and Policy

Non-commodity: Social status

Objectives:

These paper aims at examining technical efficiency variations caused by various farm-specific factors.

Methodology:

There were fifty two Krishak Samabaya Samity (KSS) in Fulbaria Upazila during 2000- 2002. Five KSS under the Thana Central Co-operative Association (TCCA) of Fulbaria upazila in Mymensingh district were selected purposively for the present study. The name of the selected co-operative societies were: (i) Raghunathpur Purba Para Krishak Samabaya Samity Ltd. (ii) Sreepur Krishak Samabaya Samity Ltd. (iii) Atarkanda Krishak Sambaya Samity Ltd. (iv) Maralkuri Krishak Samabaya Samity Ltd. (v) Mandarkanda Krishak Samabaya Samity Ltd. The selection of each of the societies was done on the basis of its credit operation, good communications and easy access. From each of the selected KSS, 10 member farmers were randomly selected for the study. There were in total 364 member farmers in the selected societies. Again, for comparing the productivity, profitability and efficiency between member and non-member farmers of the societies, 50 non-member farmers were also randomly selected. Thus, the total number of sample farmers stood at 100. In order to estimate the level of technical efficiency in a manner consistent with the theory of production function a Cobb-Douglas type stochastic frontier production function was specified. Cobb-Douglas form of production function has some well known properties that justify its wide application in economic literature. It is a homogeneous function that provides a scale factor enabling one to measure the returns to scale and to interpret the elasticity coefficients with relative ease. It is also easy to estimate and mathematically manipulate. At the same time, the Cobb-Douglas production function makes several restrictive assumptions. It is assumed that the elasticity coefficients are constant, implying constant shares for the inputs. The elasticity of substitution among factors is unity in the Cobb-Douglas form. Moreover, this being linear in logarithm,

Source of Information: Bangladesh J. Agril. Sci. 31(1): 117-125, January, 2004

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Achievement/Findings:

Cobb-Douglas Stochastic frontier Production function for this study is used to estimate the technical efficiency for rice in a selected area of Bangladesh. to identify factors responsible for variations of technical efficiency in the production, simultaneous estimation of different stochastic production and inefficiency effect models were performed. The stochastic frontier production function involves area, human labour, seed, fertilizer, manure, tractor cost, irrigation cost, age of farmer, experience of farmer and membership status (dummy). All the parameters in the crop-specific Cobb-Douglas stochastic production frontiers have the expected signs.Technical efficiency varies from 57% to 99% and 66% to 99% for Boro rice, 44% to 99% and 87% to 99% for Aus rice and 92% to 99% and 95% to 99% for Aman rice for member and non-member farmers, respectively. The mean technical efficiencies are 84%, 79%, 98% for member and 88%, 96% and 98% for non-member farmers for Bora, Aus and Aman rice, respectively. In case of member farmers, there appear to be 16%, 21% and 2% technical inefficiencies for Boro, Aus and Aman rice, respectively. In case of non-members, there appear to be 12%, 4% and 2% technical inefficiencies for Bora, Aus and Aman rice, respectively. From the above discussion, it can be concluded that non-member farmers are more technically efficient than member farmers for the production of all rice crops. Member farmers attain the highest technical efficiency for the production of Aman rice followed by Bora and Aus, whereas non-member farmers attain the highest efficiency for the production of Aman rice followed by Aus and Baro.

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