Assessing rice production efficiency of the granary and non-granary areas in Malaysia using data envelopment analysis approach

Abstract

The performance of rice production efficiency between two homogenous regions (granaries and non-granaries) at the regional level in Malaysia is evaluated by applying the data envelopment analysis (DEA) approach. In general, the granary area receives much attention to achieve sustainable rice development compared to non-granaries. The period observed from 2009 to 2018 related to the comprehensive government transformation in strengthening paddy and rice value-chain after the 2007-2008 international food crisis. Under the new National Agrofood Policy (NAFP) 2011-2020, more agricultural assistance and development expenditure was allotted. The total of eighteen regions was classified into eight granaries and ten regions for non-granaries. The output-input oriented analysis under CRS and VRS specifications were performed. From CRS and VRS technical efficiency scores ratio, the scale efficiencies were calculated. The result shows that eight (44.44%) out of eighteen regions maintain high efficiency with scores greater than 0.9000 for both specifications. Meanwhile, under ‘pure’ technical efficiency (VRS), eleven (61.11%) out of eighteen regions maintain high efficiency with scores greater than 0.9000. For productivity status, twelve (66.67%) out of eighteen areas are optimum and increasing productivity approach and the remaining six (33.33%) are decreasing productivity. This empirical study also demonstrates substantial performance variations between output (rice production) and production factors (land, planting frequency, irrigation areas, total subsidies and incentives received). Overall, the Malaysia paddy and rice industry’s efficiency performance can be considered still inefficient but has the potential to maximize the production through rationalizing the inputs used and obtain production efficiency, especially the inefficient regions.