Participation in farmers' organization and production efficiency: empirical evidence from smallholder farmers in Bangladesh

Abstract

PurposeFarmer organizations (FOs) can elevate many of the production- and marketing-related challenges by ensuring access to technology, farming information and loan for inputs and mechanization. This study assesses the major factors that affect the participation in FOs by the smallholder rice farmers in Bangladesh and evaluates the impacts of the participation on rice yield and production efficiency.Design/methodology/approachThe present study used primary data collected from 1,000 smallholder rice farmers in northwest Bangladesh, consisting of 250 farmers those participated in an organization. This study utilized a sample selection stochastic production frontier (SPF) method, a combination of the conventional SPF and the Heckman's sample selection model, to control for biases stemming from observed and unobserved attributes.FindingsThis study demonstrates that participation in an organization is significantly affected by smallholder rice farmers' education, occupation, family size, household income, land ownership and the location where they reside. At the same time, the participation status affects the productivity of smallholder farmers. Findings indicate that farmers who participated in an organization had higher rice yield (11% more) and were technically more efficient (1.4 percentage points higher) compared to farmers who did not participate.Research limitations/implicationsSince this study was carried out with representative sampled farmers from northwest Bangladesh, the findings may not represent all farmers' perceptions of FOs in the country.Originality/valueEven though more than 200,000 FOs are currently in operation, knowledge regarding the effectiveness of Bangladesh's FOs is limited. Notably, this study used a relatively new method, sample selection SPF model, to investigate the impact of FOs on the production efficiency of smallholder rice farmers in northwest Bangladesh. Therefore, this study contributes to the literature in elucidating the factors affecting participation in FOs and its impact on rice yield and efficiency. Since FOs have been somewhat ineffective in their role as service providers in Bangladesh, this study’s results will guide policymakers to intervene more successfully regarding the changes needed.