Credit Availability and Technical Efficiency of Boro Rice in Pabna District, Bangladesh: A Stochastic Frontier Analysis

Md. Zuel Rana

doi:10.11648/j.ijsdr.20180401.12

Abstract

The goal of this study is to analyze the technical efficiency and its determinants of rice production in Bangladesh using data from Boro rice farmers of Pabna district. Required data are collected from 100 Boro rice producing farmers of Pabna district selected using multistage random sampling procedure. In scrutinizing the data, farm specific technical efficiency scores are estimated using the Cobb-Douglas Stochastic Frontier Production function approach. The study found that technical efficiency of Boro rice farms in Pabna district are 92.3% which indicate that Boro rice farms have been operating below the maximum level of production frontier. It is also found that 'ploughing cost' 'pesticide cost', 'labor cost', and 'irrigation' are the significant elements that affect the level of technical efficiency while ''fertilizer cost' and 'seed' are found insignificant in moving technical efficiency of Boro rice production in the study area. Farmers can increase their production of Boro rice by 7.7% given the available technology through increasing the use of labor, seed also irrigation inputs and also by using proper amounts of fertilizer and pesticide inputs. The outcomes from the assessed inefficiency effect model make known that farm size, age, education, training and credit facility are the significant influences which are negatively related to technical inefficiency of Boro rice production. This study provides that steps to raise education, training as well as credit facilities are influential to reduce technical inefficiency of rice production in the study area. Intuitively, in this connection as a long run approach, the investment on research connected activities should be increased to change the production technology.

Highlights

Bangladesh's economy is dominated by agriculture, which continues to play a very important role in creating job opportunities, supplying raw materials to industries, obtaining foreign currency and achieving food security
The average efficiency of rice farms is 0.923 which indicates that there is still room to increase efficiency in the production process. This implies that the production of the farm can be increased by 7.7% with the given technology without increasing the additional inputs
The main objective of this study is to estimate the level of technical efficiency and determine the factors influencing technical inefficiency of Boro rice production using the Cobb-Douglas stochastic frontier approach

Summary

Introduction

Bangladesh's economy is dominated by agriculture, which continues to play a very important role in creating job opportunities, supplying raw materials to industries, obtaining foreign currency and achieving food security. Among the four basic agricultural sub-sectors, crops are one of these and rice, in particular Boro rice, has been treated as a mainstream of this sub-sector. The agricultural sector contributes about 16 percent of gross domestic product (GDP) and employs over 45 percent of the total workforce (Bangladesh Bureau of Statistics (BBS), 2015). The agricultural sector plays an important role in the economic development and food security of this highly populous country. The agricultural sector has been prominent for a long time in Bangladesh. Agriculture provides the basic food for survival of subsistence farmers in Bangladesh.

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