Profit efficiency of Pangas (Pangasius hypophthalmus) pond fish farming in Bangladesh – The effect of farm size

Abstract

This paper examines the profit efficiency and through that the sustainability potential of pangas pond fish farming in Bangladesh, focusing on the relationship between farm size and profitability. To investigate this, a stochastic frontier profit function on cross-sectional data collected from Bangladesh is utilized. Findings reveals that the mean level of profit efficiency is 74%, which implies that 26% of the profit is lost due to the combination of technical and allocative efficiency. Our findings show that profit per hectare increases with an increase in farm size but less quickly than proportional to farm size. Further, fish productivity (quantity output per hectare) is found to increase with increasing farm size, a finding contradicting the inverse farm size – productivity relationship widely found in the crop production literature. After controlling for imperfections in input markets and pond characteristics, our finding is robust. The results also indicate that increased profit efficiency is associated with better access to credit, training and extension services, suggesting that policies to improve access to these services are essential to sustain long-term fish farming in Bangladesh.