Estimating Production Efficiency in Rice Cultivation of Bihar: An Economic Approach

Abstract

Data Envelopment Analysis (DEA) has been widely used in measuring agricultural production efficiency. The present paper is to investigate the technical, allocative and cost or economic efficiencies of rice farms in Bihar. The farm level data used in the analysis was taken from cost of cultivation scheme, Government of India running in the state from 45 tehsils of Bihar. Rice is a staple food and consumed by large population of the state, nation and world level. The technical efficiency, allocative efficiencies of most of the farms were found to be 62% separately for each. Accordingly the degree of cost efficiency was estimated to be only 38.8%. Although, TE and AE being only 62%, farmers are still inefficient to achieve up to the optimal level of output. Given the available technology, farmers may reduce the paddy production cost by 61.2% to produce given level of output at least cost. Tobit analysis was carried out to assess the factors influencing efficiencies revealed that lack of education and quality seeds, and irrigation machinery were found to impact the efficiencies. Government and other policy making agencies have to formulate policies favourable to transform agriculture sector profitable which can attract the educated youth towards agriculture as profession. There is ample opportunities to minimize the cost of paddy production using a given level of technology coupled with proper and timey application of inputs, right combination of inputs with input and output prices to produce a given level of output at least cost. Besides assured supply of good quality seed, irrigation facilities, dissemination of new farming technologies, better education system and financial assistance, marketing infrastructures should be arranged timely so as to enhance the income of rural masses, and to reduce the poverty from the rural areas of the state in general and nation in particular.

Keywords: Data Envelopment Analysis, technical, allocative, cost efficiency, production, rice

JEL Classification: Q1, Q10, Q13, Q18