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Measurement of Productivity and Efficiency of Potato Production in Two Selected Areas of Bangladesh: a Translog Stochastic Frontier Analysis

A. Begum
Department of Agricultural Statistics, Bangladesh Agricultural University Mymensingh-2202, Bangladesh

M. F. Imam
Department of Agricultural Statistics, Bangladesh Agricultural University Mymensingh-2202, Bangladesh

M. A. Alam
Department of Agricultural Statistics, Bangladesh Agricultural University Mymensingh-2202, Bangladesh

Abstract/ Executive Summary:

Some partial analysis were used to determine the productivity of potato production. The per hectare potato production of the farmers of Lalmonirhat Sadar and Aditmari Upazila were 19897.88 and 21208.47 kg respectively. The benefit-cost ratio in Lalmonirhat Sadar and Aditmari Upazila were 1.52 and 1.56 respectively. The coefficient of farm size was positively significant in Aditmari in the inefficiency effect model, which meant large farmer was economically less efficient than small farmer. The sign of education was negative and significant, which indicates that inefficiency decreases with the increase of education in Aditmari Upazila. The economic efficiency varied from 81 to 99% at aggregate level, 97 to 99% in Lalmonirhat Sadar and 72 to 99% in Aditmari Upazila. The mean economic efficiencies were 98, 97 and 96% for Lalmonirhat Sadar, Aditmari Upazila and at aggregate, level respectively. There appeared to be 2, 3 and 4% economic inefficiencies for Lalmonirhat Sadar, Aditmari and all regions, respectively. This indicates that the cost of production could be reduced on an average by 4% keeping the output constant at the aggregate level.

Keywords: Translog, Stochastic, Productivity, Efficiency, Potato

Location: Two Upazilas namely: Aditmri and Lalmonirhat Sadar of Lalmonirhat district

Start Date: 01-01-2006

End Date: 31-03-2006

Program Area: Variety and Species

Commodity: Potato

Objectives:

To measure the productivity and profitability of potato production in two selected areas of Bangladesh;
To estimate the economic efficiencies of potato farmers;
To identify factors which influence potato production;
To suggest some policies to increase productivity, profitability and efficiency of potato production.

Methodology:

Two Upazilas namely: Aditmri and Lalmonirhat Sadar of Lalmonirhat district were selected purposely considering the relative importance of potato production. To collect the primary data it was not possible to include all the farmers under the study area because of limitation of time, money and personnel. For minimizing costs and time and achieving the ultimate objectives of the study 100 farmers were selected randomly from the study area. Probability sampling technique was adopted. At first a sampling frame of farmers was constructed with the help of village leaders and some other relevant people. Afterwards a stratified random sampling method was used to select the potato farmers for the study. The data were collected for the period January to March 2006. The sample was composed of small (below 1.00 hectare), medium (1.00-300 hectare) and large (above 3.00 hectare) farms respectively. Among the 100 potato farmers 50 small 30 medium and 20 large farmers were interviewed in this study. For this study, a Translog Stochastic Cost Frontier was used. The Cobb-Douglas form of production or cost function imposes certain restrictions, such as, the elasticity coefficients are constant, implying constant shares regardless of the input level or input cost and the elasticity of substitution among inputs is unity, whereas the translog production or cost function does not impose these restrictions upon the production or cost structure and it is a flexible functional form. Another advantage of translog stochastic frontier function is that with the help of this function we can estimate the effects of interactions of different complementary variables along with the individual effect of each variable on output or cost. For this study, the parameters of the Translog Stochastic frontier cost function model are estimated by the maximum likelihood method, using the computer program, FRONTIER Version 4.1 with region-specific economic efficiencies and mean economic efficiency for the farms involved and also inefficiency effect model.

Source of Information: Progress. Agric. 21(1 & 2): 233–245, 2010, ISSN 1017-8139

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

In the productivity analysis the farmers of Aditmari Upazila attained higher output per hectare (21208.47 kg) than the farmers of Lalmonirhat Sadar Upazila (19897.88 kg). In the translog stochastic cost frontier the coefficient of fertilizer price, manure price, per hectare rent of land and per hectare irrigation cost have significantly positive contribution on the increase of cost of production of potato. The mean economic efficiency estimated from translog stochastic cost frontier was 96%. This implies that the cost of production per farm can be reduced by 4% keeping the output constant. In the inefficiency effect model there was no significant effect at the aggregate level. But in Aditmari Upazila the coefficient of farm size is positively significant, which means that inefficiency increases with the increase in farm size, while the coefficient of education is negatively significant. This implies that economic inefficiency decreases with the increase in education that means educated farmers are economically more efficient than noneducated or less educated farmers. The variance ratio parameter γ associated with the variance in the stochastic frontier is significantly positive for potato production in Aditmari Upazila. It indicates that there are significant economic inefficiency effects in potato production in Aditmari Upazila.

Educated farmers used more input than non-educated or less-educated farmers,
Educated farmers adopted advanced technology rapidly than less educated farmers,
Educated farmers had the adequate knowledge about the optimum utilization of resources and manage their inputs in the most efficient way.

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