Determinants of Cost Inefficiency of Maize Farming in Different Agro-climatic Regions of Sikkim, India

Abstract

The present study makes an attempt to analyse farm level cost inefficiency of maize farming and its determinants in different agro-climatic regions of Sikkim. The primary data for the study were collected during the third and fourth quarter of 2018 from different agro-climatic regions of Sikkim. Both data envelopment and stochastic frontier analysis were used for measurement of the farm level inefficiency across different agro-climatic regions of the study area. Based on the Cobb–Douglas cost function for maize output, the article simultaneously estimated stochastic frontier cost function and examined the effect of exogenous factors on farm level cost inefficiency. The results of this study showed that, on an average, the farmer incurred cost which was 8 per cent to 72 per cent above the minimum cost defined by the best practice frontier. Further, cost inefficiency was relatively higher among the farmers in temperate agro-climatic region. Greater cost inefficiency seems to be directly associated with remoteness of farmland from input market. The study also found that the additional years of farming experience and farming in the rented plots were useful in reducing cost inefficiency.