MEASURING EFFICIENCY OF WHEAT PRODUCTION IN NORTHERN REGION OF BANGLADESH: A STOCHASTIC FRONTIER FUNCTION ANALYSIS

Abstract

The main objective of the present study was to identify and analyze the possibilities for improving productivity of wheat by increasing the farmers’ productive efficiency. The efficiency of wheat farmers in the northern region of Bangladesh was measured through the estimation of stochastic frontier production function used by cross-sectional data for the 2007-2008 crop year. The attempt of the study was also to determine some socio-economic characteristics and management practices which influence technical efficiency of wheat production. Technical efficiency was defined as the ratio of the observed output to the corresponding frontier and was estimated from the composed error term. Variations in the technical efficiency index across the production units were explained through a number of farmers and farm characteristics’ variables following Battese and Coelli (1995) and incorporating the sprit of Rougoor et al. (1998). The yield of wheat varied across location, farmer and farm categories. The average yield was 3503 kg/ha with the highest average by trained farmers. It was actually for the adoption of new technologies, new varieties (HYV) and favorable climate. Fields recording higher yields were sown timely and received more fertilizers, manure and irrigation. Other socio-agro-economic factors also played roles in the variation in yields. The biophysical constraints limiting wheat production were lack of quality seed, excessive weed, poor utilisation of irrigation facilities, etc. The estimates of a generalised stochastic frontier production function models showed that fertiliser, FYM and irrigation had significant positive impacts on wheat production. The maximum likelihood method is applied for the estimation of the parameters of the model and the prediction of the technical efficiencies of the farms and farm-specific Cobb-Douglas stochastic normalized cost frontier and economic inefficiency effects over time. The mean farm-specific technical allocative and economic efficiency of wheat growers were unit’s ranging from 44 to 97%. The coefficient of farmers’ education, wheat farming experience and training on wheat cultivation were negatively associated in the inefficiency effect models implying that efficiency increases with the increase of farmers’ education, wheat farming experience and training on wheat production. Trained farmers adopted more recommended wheat technologies and achieved higher yield. The results indicated that the majority of wheat farmers in northern region of Bangladesh operated close to the maximum technically feasible yield levels and that there was limited potential to improve technical efficiency. Perhaps the most contemporary interest was that farmers considered maintaining the environment as an important objective achieved higher level of technical efficiency. The study suggests that the frontier farmers received higher yields following optimum seeding time, using more fertiliser, manure and applying timely irrigation with modest use of seed rate, and human labour. However, for sustainable wheat yield and production more emphasis should be given on updating farmers’ knowledge through proper training/orientations.