Technical Efficiency and Economic Analysis of Rice Crop in Khyber Pakhtunkhwa: A Stochastic Frontier Approach

Abstract

Pakistan is one of the world’s leading producers, exporters, and consumers of rice. This study analyzes the technical efficiency of rice growing farmers in the Swat district of the Khyber Pakhtunkhwa province of Pakistan. A three-stage sampling procedure was used to interview 204 rice growers through a well-structured and pretested interview schedule. The maximum likelihood function results showed that chemicals, urea, diammonium phosphate (DAP), labor, and farmyard manure (FYM-dummy) were positive and had a statistically significant effect on rice yield; this implies that a 1% increase in chemicals, urea, DAP, labor, and FYM leads to an increase in rice production by 0.22%, 0.25%, 0.02%, 0.03%, and 0.01%, respectively. The estimated results of model 2 reported that respondents’ age had a positive significant effect on inefficiency, showing that with a rise in farmers’ age, the farmers’ inefficiency significantly increased. The education and experience of farmers were negative and significant, implying that these variables significantly decreased the farmers’ inefficiency. Furthermore, the results showed the mean technical efficiency as 87%, with a minimum of 66% and a maximum of 99%. The study recommends that the extension department needs to arrange training programs for the rice growers in this specific area to boost rice yield, enhance agronomic skills, and facilitate these farmers with the technical knowledge for efficient production.