Measurement of Cost Efficiency in the Case of Rice Production in West Bengal and Andhra Pradesh

Abstract

West Bengal and Andhra Pradesh are two large rice producing states in India. Although both the states have undergone rigorous changes in agriculture, the forms of reform have been very different in these two states. While institutional reforms dominated in West Bengal, in Andhra Pradesh agricultural growth was solely driven by technological reforms. Given this background this paper analyzes the cost efficiency of rice production in these two states. It has examined the trend of cost efficiency and technical efficiency of rice production in the two states for the period 1971-2005 by using stochastic frontier analysis. It is observed that cost efficiency in case of West Bengal was higher during the 1970s and early 1980s but after that from the 1990s Andhra Pradesh is having better cost efficiencies. The technical efficiencies are also similar in both the states. Thus the states, which have followed different paths of agricultural development, show similarities as far as technical efficiency is concerned. But Andhra Pradesh and West Bengal show that both cost and technical efficiency are below the optimum level which is the real cause of worry. From the above analysis, it seems that there is inefficiency of input in each factor used in both the states.