Economic Analysis of Dryland Integrated Production System in Western Agroclimatic Zone of Tamil Nadu, India: A DEA Approach

Abstract

Background: Efficiency of production system is calculated by the input spent to amount of output produced. The Agronomic efficiency has been found to be below 48% than the world efficiency standard of 40 kg ha-1. The average fertilizer usage of India is 133 kg ha-1, 232% higher than the global standard fertilizer of 40 kg ha-1. The certified seeds and agriculture machinery usage has been increased by 15% and 13% in India but the efficiency of farm stays behind. Methods: With this back ground the present study applied cost approach variable return to scale Data Envelopment Analysis (DEA) model to evaluate the Indian farms resource using 200 rural farms of Tamil Nadu state. The data envelopment analysis models have the advantage of simultaneous measure of technical, allocative and cost efficiency of the individual farms. Result: The cost efficiency among the respondents ranged from 0 to 1 with a mean efficiency of 0.66. The study found that Decision-Making Units (DMU) have cost inefficiency, suggesting that most of the DMU operated very far away from the efficiency frontier. Allocative inefficiency (0.55) is worse than the technical inefficiency (0.80), implying that the lower economic efficiency is the result of high allocative inefficiency.