Abstract
The objective of this paper is to measure the technical, allocative and economic efficiencies of sugarcane farms in Pakistan. These efficiencies are measured by data envelopment analysis method using the farm level data collected from 333 sugarcane growers of Pakistan in 2008. The results show that the average technical efficiency of the sugarcane farms is 75 percent, the average allocative efficiency is 83 percent, and the average cost efficiency is 62 percent. The results indicate that the sugarcane farms of Pakistan can reduce the costs of production by 38 percent to produce the same level of output by using the inputs in optimal proportion and by improving the technical efficiency. The results also show that the existing level of sugarcane production can potentially be increased by 33.33 percent with the same level of inputs by improving the technical efficiency of the sugarcane farms.
Highlights
Sugarcane is one of the major crops of Pakistan
The results show that the average inputoriented technical efficiency score is 0.75, which indicates that on average 25 percent of the input use can be reduced to produce the observed level of sugarcane production by improving the technical efficiency of farms
The average input-oriented economic efficiency is 0.62, which indicates that the sugarcane farms can reduce the costs of production by 38 percent to produce the same level of output by using the inputs in optimal proportion given their respective prices and by improving their technical efficiency
Summary
Sugarcane is one of the major crops of Pakistan. In the year 2009-10, sugarcane was sown in the area of 0.943 million hectares with estimated sugarcane production of 49.373 million tonnes and yield of 52.357 tonnes per hectare (Government of Pakistan, 2010). According to FAOSTAT (2010), Pakistan has become the fourth largest sugarcane producer in the world in terms of area harvested and the fifth largest in terms of production. It stands at 63rd place in the world in terms of yield. Despite among the top growers in the world, Pakistan has been net importer of sugar almost each year due to lower sugarcane yield and the rising demand for sugar. There is need to investigate the productivity and efficiency across sugarcane farms, and to evaluate the gap between the actual and potential production of sugarcane in Pakistan
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