Measurement of technical efficiency of rice-wheat system in Punjab, Pakistan using DEA Technique.

Abstract

This study was conducted in the Department of Agricultural Economics, University of Agriculture, Faisalabad, Pakistan during the year 2007 to estimate technical efficiency and identify the determinants of technical inefficiency of rice-wheat farming system in Punjab. For this purpose a non-parametric data envelopment analysis (DEA) technique was applied. Tobit regression model was estimated to investigate determinants of technical inefficiency of the system. The results revealed that mean technical efficiency of the system was 0.83, with minimum level of 0.317 and maximum of 1. This indicated the existence of substantial technical inefficiency in rice-wheat system in Punjab. The study further revealed that if sample farms in rice-wheat system operated at full efficiency level these could reduce their input use by 17 percent without any reduction in level of output and with existing technology. Results of the Tobit regression model showed that years of schooling, number of contacts with extension agents and access to credit variables had negative impact while farm size, age of farm’s operator and farm to market distance had positive impact on technical inefficiencies of rice-wheat system in Punjab. It is suggested that government should focus on attracting young and educated people in farming by providing incentives in the form of soft loans.