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Profit Efficiency and Influencing Factors for the Inefficiency of Maize Production in Bangladesh

K M Mehedi Adnan
Department of Agricultural Finance and Banking, Sylhet Agricultural University, Bangladesh

Swati Anindita Sarker
Department of Agricultural Economics, EXIM Bank Agricultural University Bangladesh, Chapainawabganj, 6300, Bangladesh

Abstract/ Executive Summary:

This study examines the profit efficiency and the responsible factors for inefficiency in 350 hybrid maize growers in selected areas of Bangladesh by using the profit frontier function and inefficiency effects model. A multistage stratified random sampling procedure was used for data collection. This study proves that maize production is profitable. The average net return is 32392 BDT/acre and the benefit-cost ratio was more than 2. Farmers use more organic manure, but less chemical fertilizer than recommended doses. The outcomes also disclosed a profit efficiency score of 0.71, which indicates a 29% profit inefficiency. The average net benefit was 32392.40 BDT/ acre and profit-loss 16975.99 BDT/acre. This implies that the enhancement of allocative, technical, and scale efficiencies can reach a potential profit of 49368.39 BDT/acre. This study found that age, educational level, extension experience, and non-farm income were the main factors for profit inefficiency. This study suggests that farming efficiency can be increased remarkably by enhancing the educational status and proper extension services. Furthermore, the necessary steps for promoting an effective system of soil management with good irrigation facilities and increasing agricultural training will improve efficiency.

Keywords: Profitability, Efficiency, Battese and coelli model, Determinants, Maize, Bangladesh

Location: In Bangladesh

Start Date: 00-00-2019

End Date: 00-00-2019

Program Area: Crop-Soil-Water Management

Commodity: Maize

Objectives:

To reveal the profit efficiency of the hybrid maize growers by identifying farm-specific features which will explain deviation inefficiency of individual farmers and also find out the impact of maize cultivation on the income of countryside households’ in Bangladesh.

Methodology:

Study area and data collection: In this research, primary data were collected from June to August 2019 from different 4 agro-ecological zones of Bangladesh through an intensive survey method. The multistage stratified random sampling method was employed for data collection from 350 farm households as a sample of 35 villages. Data collection was completed from 7 villages of Manikgonj district (wet agro-ecology), 10 villages of Dinajpur district (arid agroecology), 8 villages of the Comilla district (rainy agro-ecology), and 10 villages from Bogra district (semi-dry agroecology). The sampling framework. Climate, geography, risk perception and attitude toward risk, farm and farmer characteristics, and planting trends in the four regions were all taken into consideration in the first stage. In the next turn, a stratified random sampling method was employed to pick 10 symbolic Upazilas out of four regions. Step three involved selecting 35 villages from ten separate Upazilas using a simple random sampling technique. Again 10 farmers from each village were selected using the stratified random sampling technique at stage 4. The data collection was conducted from hybrid maize farming households. They are interviewed irrespective of gender, family size, educational status, extension contact, land ownership status, farm size, and agricultural experience through a well-prepared questionnaire. Empirical model: The three components such as: Technical, allocative, and scale inefficiency are used for the assessment of profit inefficiency. Farm productivity levels deceits underneath the attainable yield are called technically inefficient. If the farmhouse not using inputs in prime percentage, it can also be allocative inefficient. In the case of the profit-maximizing condition, it might be scale inefficient if its yield level is not paralleling the output price with the marginal cost. The latest progress conglomerate all of these procedures into a single structure, that permits better proficient evaluations if the scheme is assessed simultaneously by a profit function. The frontier production function is a popular way to measure efficiency [64,65]. However, Fotopolous and others debate that when farmers find different prices and various aspects of the product then the production function model of quantity efficiency is not suitable. This directed to use of stochastic profit function to appraisal farm-specific characteristics deviation and efficiency directly. The profit function cartels these thoughts of technical scale and allocative inefficiency in the revenue connection with other faults in the production choice are presumed to be interpreted as lower revenue or income for the farmer. Also, several numbers of research on efficiency calculation, the forecast efficiency indices were retreated contrary to numerous farm features, to elucidate the detected variances in efficiency between farmhouses, using two-stage formula. Battese and Coelli prolonged stochastic production frontier function.

Source of Information: Journal of Agriculture and Food Research 5 (2021) 100161

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

This research attempts to measure efficiency and the determinants responsible for the profit inefficiency by using Battese and Coelli’s prolonged stochastic production frontier function and inefficiency effects model. This research adds a significant contribution to the existing literature by analyzing the factors that are responsible for-profit inefficiency of maize farmers. Previous literature are also focused on farmers’ profit efficiency of different crops like rice, maize, cowpea, potato, cocoyam, groundnut etc. but a few studies focused on factors affecting maize farmers’ profit inefficiency. The result of the study rejects the null hypothesis and proves that maize production is profitable. The average net return is 32392 BDT and the benefit-cost ratio is more than 2. Farmers use more organic manure, but less chemical fertilizer than the recommended doses. The estimated profit efficiency is 0.71. The average actual hybrid maize yielding a profit is 32392.40 BDT/acre and maize farmers face a profit-loss of around 16975.99 BDT/acre. This implies that the development of technical, allocative and scale efficiencies can reach a potential profit of about 49368.39 BDT/acre. Age, educational level, extension experience, and non-farm income are the major factors that affect profit inefficiency and farming efficiency can be increased remarkably by enhancing the educational status and proper extension services. Wongnaa et al. (2019) also suggested that maize farmer’s efficiency could be increased through easy access to extension services. Also, the necessary steps for promoting an effective system of soil management with good irrigation facilities and also increase agricultural training will improve efficiency. Moreover, the results also revealed that households producing maize have upper income from rice production.

Knowledge Management: Journal