The Nexus of Agricultural Credit, Farm Size and Technical Efficiency in Sindh, Pakistan: A Stochastic Production Frontier Approach

Abstract

This study examined the impact of agricultural credit and farm size on the technical efficiency of rice productivity in Sindh, Pakistan. A cross-sectional random sampling technique was used to collect data from 180 rice growers through a face to face interview. The stochastic production frontier technique was employed to analyse the survey data. The results of Maximum Likelihood Estimation (MLE) showed that credit, farm size, fertilizer, and labor significantly influenced the rice productivity in Sindh, Pakistan. Additionally, larger and significant scale of elasticity was found on credit while larger and significant marginal effect was found on farm size. Further, the mean technical efficiency was 0.97, which implies that 97 percent of rice farmers are technically efficient. Therefore, agricultural credit and farm size are the dominant factors in the improvement of rice production as well as the technical efficiency of smallholder farmers in Sindh, Pakistan.