Technical, economic and allocative efficiencies of rice farms in Nalgonda district of Telangana state

Increasing the efficiency in production assumes greater significance in attaining potential output at the farm level. An attempt has been made in this study to estimate the technical, economic and allocative efficiencies of rice farms using stochastic frontier approach. The influence of socio-economic factors on the technical efficiency was measured using regression analysis. The mean technical, economic and allocative efficiencies were found to be 92.44, 81.68 and 88.36 per cent respectively. The results revealed that 63 and 76 per cent of technical and economic inefficiencies respectively were largely within the control of individual farmers. Human labour was found to be the major determinant of rice productivity in the region. One per cent increase in the prices of human labour, machine labour and fertilizers was found to reduce the profits by 0.25, 0.46 and 0.18 per cent respectively at their mean levels. Education level of a farmer, experience in rice cultivation, membership in cooperative society and access to institutional credit were the most influential determinants of technical efficiency. The mean technical efficiency values of greater than 90 per cent for majority (55.83%) of the rice farmers indicated that there was little scope for improving the efficiencies of these farmers with the existing technology as the farmers were already operating near the frontier. Hence new location-specific technologies should be developed and transferred to farmers. However, for farms operating at lower levels of efficiency, sufficient potential also exists for improving the productivity of rice by proper management and allocation of the existing resources and technology.