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Economic Efficiency of Sugarcane Production in Northern Region of Bangladesh

S. Khatun
Bangladesh Sugarcane Research Institute, Ishurdi, Pabna

M. H. Rahman
Professor
Department of Agricultural Economics, Bangladesh Agricultural University, Mymensingh

Abstract/ Executive Summary:

The present study was undertaken to estimate the economic efficiency of sugarcane farmers and to identify and measure the impacts of different factors affecting inefficiency of sugarcane production in Bangladesh. The study employed farm level cross sectional data from three sugarcane growing areas of Bangladesh during the period of November 2007 to December 2008. Economic efficiency of sugarcane farmers' was found to vary across locations. The study showed that the wage rate of human labour, price of organic manure (OM), Muriate of Potash (MP), and irrigation cost contributed significantly. The average economic efficiency of sugarcane farmers was 62 percent. This indicates a good potential for increasing sugarcane output by 38 percent with the existing technology and levels of inputs while considering the amount and cost of inputs. The education, experience and extension contacts were found to have significant effect on yield and economic efficiency of sugarcane farmers. Therefore, educational level, experience and extension are the important factors for obtaining maximum achievable yield.

Keywords: Economic efficiency, Sugarcane growers, Educational level, Extension contact

Location: Northern Region, Bangladesh

Start Date: 01-11-2007

End Date: 31-12-2008

Program Area: Socio-economic and Policy

Non-commodity: Efficiency

Objectives:

1. To estimate the farm specific economic efficiency of sugarcane production in the study area

2. To identify the different factors associated with economic efficiency of sugarcane farmers.

3. To measure the different factors associated with economic efficiency of sugarcane farmers.

Methodology:

Primary data were collected from total 300 sample farmers from the 12 (3x4) upazilla taking 25 farmers randomly from each upazilla during the cropping season of 2007-08 through interview. A pre-tested interview schedule was applied to collect data. The economic Efficiencies were estimated with the help of derived normalized cost frontier described in equations by the maximum likelihood estimates (MLE) method using the economic computer software package FRONTIER 4.1 (Coelli, 1996). Asides from estimates of coefficients the model, provides sigma squared, gama (y) and log livelihood function. To generate farm specific economic efficiency indices for sugarcane production in the study areas, the stochastic frontier cost function with production cost as dependent variable was estimated in which all input costs were normalized by seed price.

Source of Information: BANGLADESH JOURNAL OF SUGARCANE, Vol. 32, pp. 98-107, April 2011, ISSN- 1991-8925.

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

In this study it is indicated that economic inefficiency existed among the farmers. Experience, education and field visit (extension contact) have the positive impact in increasing production and economic efficiency of sugarcane farmers in the stochastic frontier cost function models. Economic efficiency increases (or inefficiency decreases) with the increase in education and experience on sugarcane farm operators. Besides these, extension service should be strengthened so that farmers' consciousness regarding improved production and management practices ensured to improve farmers' efficiency.

Knowledge Management: Journal