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

Mahmudul Hasan
Department of Economics, University of Rajshahi, Rajshahi, Bangladesh

Elias Hossain
Department of Economics, University of Rajshahi, Rajshahi, Bangladesh

Ataul Gani Osmani *
Department of Economics, Varendra University, Rajshahi, Bangladesh

Abstract/ Executive Summary:

Rice is the dominant food crop in Bangladesh. Like Aman and Aus varieties, Boro rice also grows in leaps and bounds in the country. The production of Boro rice during the dry season is welcomed as increasing use of irrigation in the country is expected to raise Boro rice production for achieving food self sufficiency. This study estimates the technical efficiency of Boro rice farms and determines the important factors affecting the level of technical inefficiency of the farms. This study mainly uses primary data for the analysis, collected from 112 rice producing farms of Jhenaidah district using multistage random sampling technique. The Cobb-Douglas stochastic production frontier approach is employed to estimate the technical efficiency of Boro rice farms. An inefficiency effect model is also used to determine the factors that affect the level of inefficiency of the Boro rice farms. The empirical results of the Cobb-Douglas stochastic production frontier approach show that the technical efficiency of Boro rice production is on average 0.92. This indicates that the level of technical efficiency in the study area is high. It also finds that cost of labor, irrigation, seed and ploughing are the important factors which affect increasing efficiency of Boro rice production. The results from the estimated inefficiency effect model reveal that farm size, age, education, training and credit facility are the significant factors which are negatively related to technical inefficiency of Boro rice production. This study suggests that steps to increase education, training and credit facilities are instrumental to reduce technical inefficiency of rice production in the study area.

Keywords: Technical Efficiency, Cobb-Douglas Stochastic Production Frontier, Rice Production, Bangladesh

Location: Jhenaidah district of Bangladesh

Start Date: 00-00-2014

End Date: 00-00-2015

Program Area: Socio-economic and Policy

Commodity: Rice

Objectives:

There are few studies which explore farm level technical efficiency of Boro varieties in Bangladesh, focusing on specific study area. The present study is an endeavor to fulfill this gap in the literature.

Methodology:

Study Area and Data Collection The present study is based on primary data that are collected from Jhenaidah district of Bangladesh. Agriculture is the main livelihood strategy of the people of Jhenaidah district and the district is dominated by rice farming. The survey has been conducted in 2016 on the 2014-15 production years. The survey has been conducted with great care which covers different socio-economic information of 112 small, medium and large farmers. The selection of the respondents has been made using the multistage simple random sampling procedure. At the first stage, two out of six upazilas under Jhenaidah district are selected using simple random sampling. The upazilas are Kotchandpur and Kaligonj. There are 6 and 11 unions under Kotchandpur and Kaligonj upazilas, respectively. At the second stage, using random sampling technique, from each upazila two unions are chosen which are Elangi and Bolabaria union of Kotchandpur upazila and Triechandpur and Rakhalgachi of Kaligonj upazila. At the third stage, two villages under each union are selected using random sampling technique. Finally, a list of farmers of the selected villages are collected from the upazila agriculture office and chosen 14 respondents from each village using simple random sampling technique which accounts a total of 112 respondents. Method of Analysis Technical efficiency is the maximum possible output obtained from a given set of inputs. According to, within a given level of inputs and technology the maximum possible output of a firm can be shown by the frontier production function. The present study uses stochastic frontier production function for measuring technical efficiency of Boro rice farming in the study area. The Empirical Model In the stochastic frontier approach, two functional forms of production function are often used to estimate technical efficiency. These are Cobb-Douglas production function and translog production function. In the present study, Cobb-Douglas production function is used to estimate the technical efficiency of rice farms.

Source of Information: International Journal of Agricultural Economics 2016; 1(4): 103-107

Article Link (Online Journal): http://www.sciencepublishinggroup.com/j/ijae doi: 10.11648/j.ijae.20160104.12

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The main objective of this study is to estimate the level of technical efficiency and determine the factors affecting on technical inefficiency of Boro rice production using Cobb-Douglas Stochastic frontier approach. It is observed that the Boro rice farms in the study area run their operation with less than full potentials as the mean technical efficiency of the farmers is found to be 92%. This implies that output of the farm can be increased by 8% under the given technology without increasing any additional inputs. The estimation results clearly suggest that farm size, age, education, training and credit facility are the crucial factors which can reduce the existing technical inefficiency in Boro rice production. Based on the results, the study suggests that government should take necessary steps to increase the education level, training facilities and extension services of the farmers as well as improve the credit facility of the farmers.

Knowledge Management: Journal