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Technical Efficiency of Boro Rice Production in Meherpur District of Bangladesh: a Stochastic Frontier Approach

Md. Nehal Hasnain
Department of Economics, University of Rajshahi, Rajshahi-6205, Bangladesh

Md. Elias Hossain,
Department of Economics, University of Rajshahi, Rajshahi-6205, Bangladesh

Md. Khairul Islam
Department of Economics, University of Rajshahi, Rajshahi-6205, Bangladesh

Abstract/ Executive Summary:

Although rice is the main crop in Bangladesh and the country is ranked as the sixth largest rice producer in the world, researchers observe that rice is not produced with full efficiency in the country. It is also observed that owing to the application of high yielding variety seeds, chemical fertilizer, pesticide, and irrigation, productivity of rice in Bangladesh has increased in the recent years though it is still lower compared to other Asian countries. A review of existing literature reveals that so far little attention has been given by the researchers in investigating the efficiency of rice production in Bangladesh. Thus, the objective of the present study is to analyze the technical efficiency of rice production in Bangladesh using data from boro rice farmers. Required data were collected from 115 boro rice producing farmers of Meherpur district selected using multistage random sampling procedure. In analyzing the data, farm specific technical efficiency scores are estimated using the Translog Stochastic Frontier Production function approach. The study found that technical efficiency of boro rice farms in Meherpur district is 89.5%. It was also found that ‘labor’, ‘fertilizer and pesticide’, ‘seed’ and ‘irrigation’ were the significant factors that affect the level of technical efficiency while ‘farm size’ and ‘ploughing cost’ were found insignificant in affecting technical efficiency of boro rice production in the study area. The results indicate that boro rice farms in the study area had been operating below the maximum level of production frontier and given the available technology, farmers can increase their production by 10.5% through increasing the use of labor, seed and irrigation inputs and also by using proper doses of fertilizer and pesticide inputs.

Keywords: Boro Rice, Technical Efficiency, Stochastic Frontier Approach, Bangladesh

Location:

Start Date:

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Performance

Objectives:

The objectives of this study were to determine the level of technical efficiency of boro rice production in Meherpur district of Bangladesh and to assess the effects of the key inputs on technical efficiency of boro rice production in the study area.

Methodology:

Study Area and Data Collection: The present study is mainly based on primary data. Using multistage random sampling technique, required data are collected from a total of 115 boro rice producing farmers. The study is carried out in four villages, namely, Chandpur and Shibpur of Kutubpur Union, and Rajnagar and Borshibaria of Pirojpur Union under the Sadar Upazila of Meherpur district in Bangladesh. Concept of Technical Efficiency: Technical efficiency of a farm is the ratio of farm’s actual output to the technically maximum possible output, at given level of resources (Battese and Coelli, 1988; Adedejit et. al., 2013). It can be classified broadly into three categories, namely, deterministic parametric estimation, stochastic parametric estimation and non-parametric mathematical programming (Udo and Akintola, 2001). Parametric frontier approach assumes functional form on the production function and makes assumptions about the data. The most common functional forms include the Cobb-Douglas, Constant Elasticity of Substitution (CES) and Translog production functions. Deterministic frontiers assume that all the deviations from the frontier are a result of firms’ inefficiency, while stochastic frontiers assume that part of the deviation from the frontier is due to random events (reflecting measurement errors and statistical noise) and part is due to farm specific inefficiency (Forsund et. al. 1980; Battese, 1992 and Coelli et. al., 1998). On the other hand, nonparametric frontier assumes no functional form on the production frontiers and does not make assumptions about the error term. It uses linear programming approaches. The most popular nonparametric approach is the Data Envelopment Analysis (DEA). The concept of efficiency of farms has widely been studied by a number of researchers. Most of the studies estimated technical efficiency using the stochastic frontier production function approach (Bravo-Ureta and Pinheiro, 1993; Parikh and Shah, 1994; Ajibefun and Abdulkadri, 1999; Ajibefun and Daramola, 1999; Sharma et al., 1999 and Ajibefun et al., 2002). Following these studies the stochastic parametric model is formulated in this study to analyze the technical efficiency of boro rice production in the study area. Stochastic Frontier Production Function: The stochastic frontier model decomposes the error term into a two-sided random error that captures the random effects outside the control of the firm (the decision making unit) and a one-sided efficiency component. The model was first proposed by Meeusen and van den Broeck (1977) and Aigner et. al. (1977).

Source of Information: American Journal of Agriculture and Forestry 2015; 3(2): 31-37 ISSN: 2330-8583 (Print); ISSN: 2330-8591 (Online

Article Link (Online Journal): http://article.sciencepublishinggroup.com/pdf/10.11648.j.ajaf.20150302.14.pdf

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Achievement/Findings:

Estimation of production efficiency is important to increase the productivity of agriculture sector in a developing country like Bangladesh. The present study finds that the average level of technical efficiency of boro rice farms in the study area is 89.5%. This result means that the boro rice farms in the study area had been operating below the maximum level of production frontier. Given the available technology, farmers can increase their production by 10.5%. The estimated results of Translog production function showed that labor cost, seed cost and irrigation cost have positive and significant effect on the level of technical efficiency of boro rice production in the study area. Thus, farmers may increase production level by increasing the use of these inputs. On the other hand, fertilizer and pesticide cost was found as negative contributor to the level of production efficiency. This result might indicate that fertilizer and pesticides were being used at high doses by the farmers in the study area and therefore, they should use these inputs with appropriate doses. Thus, on the basis of the findings of the present study, it can be suggested that the government and non-government organizations operating in the study area should make the farmers aware about proper use of inputs of boro rice production to increase the level of technical efficiency.

Knowledge Management: Journal