Production Risk and Competency among Categorized Rice Peasants: Cross-Sectional Evidence from an Emerging Country

Abstract

Pakistan is an agrarian economy confronting both risk and uncertainty. Rural migration to urban and off-farm work is increasing in the country. Off-farm work assists in decreasing risk and uncertainty while technical efficiency is linked with off-farm employment. This research effort aims at investigating the underpinnings of production characteristics, risk, and efficiency across categories of rice farmers, i.e., with and without off-farm work, by developing two stochastic frontier models. Empirical results reveal that both groups of farmers are using inputs in different ways, subsequently production varies across these groups. Farmers in both the categories have common characteristics in terms of production function. Coefficient of family size is positively significant to the group of farmers having off-farm work while negatively associated to their counterparts. High temperature and prevalence of disease found risk increasing factors. Though one group is more efficient, in general both groups are technically inefficient. The short-term policy focus should be diverted to ensuring availability and timely application of inputs to enhance efficiency. In the long run, policy initiatives need to be taken towards rural development by providing employment facilitating social and economic infrastructure, along with focus on Research and Development (R&D) particularly keeping the rice belt in view.