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Analysis of Agriculture Credit Contribution in Cotton Production of Southern Punjab, Pakistan
The potential benefits to use digital credit facilities in agriculture to enhance the efficiency of small-scale farmers have remained largely untapped. To fill this gap, this study aims to analyze and compare the economic, allocative, and technical efficiency of small-scale farmers either beneficiaries or non-beneficiary of e-credit facilities. Furthermore, the study has also examined the determinants of economic, allocative, and technical efficiency for both beneficiary and non-beneficiary. The study employed Data Envelopment Analysis to compute the score of efficiency and Tobit regression is used to examine the determinants of efficiency. The results of the study revealed a mean value of efficiency scores of 0.57, 0.54, and 0.48 for technical, allocative, and economic efficiency respectively. Results of the study also indicated a positive impact of the adoption of e-credit on technical, allocative, and economic efficiency. Moreover, education of farmers, use of lasers, internet access, ownership of tractors, quality of land, farmer participation in village social network, and household member engagement in farming have a positive impact on technical, allocative, and economic efficiency. It is suggested that there is a need to provide digital credit facilities and internet facilities to small farmers so they can increase their farm efficiency. The study also suggested that there is a need to invest in human capital especially education and provision of institutional support to small farmers.
Southern Punjab of Pakistan known as the cotton zone, study was conducted to examine cost benefit analysis of cotton cultivation in district Muzaffargarh (core cotton zone), Punjab in 2015-16. The focus of the study was to evaluate economic analysis of cotton production and financial impact of cotton growers in cotton cultivation. A sample of one hundred cotton growers were randomly selected and directly interviewed for pre-tested questionnaire. Benefit cost ratio estimated 1.479 which denoted the profitability of cotton cultivation. Econometric model of cotton profit function was examined, price of output and quantity produced of cotton positively affect profit, while cost of production negatively affect profit. It was determined Cropped Area, Land Preparation, Seed, Fertilizer, Pesticides, Irrigation and Labor statically significant and positively affects cotton production. Proper policies are pertinent to input prices and output of cotton mandatory for cotton growers to increase profitability and refining socioeconomic status in farming community.
This study has estimated the technical efficiency of Non-BT cotton and BT cotton production
in Pakistan. Those farmers were selected as the respondents for the study that used to cultivate Non-BT
cotton and BT cotton varieties. In Pakistan, the NonBT cotton varieties have been promptly substituted
with the BT-cotton varieties. This substitution of imported BT-cotton seed is taking into account without
considering the local environmental conditions of Pakistan. Thus the main objective of the research was on
the comparative efficiency and the productivity analysis of BT- Cotton varieties with those of the conventional
non-BT-Cotton varieties. The population of this research covers the area of Rahim Yar Khan of Pakistan.
Two hundred and fifteen farms were selected from each of the NonBT-cotton farms and BT-cotton
farms. The Cobb- Douglas Stochastic Frontier Analysis (SFA) has been employed to determine the technical
efficiency of these growers. Technical efficiency has been found dissimilar under both the situations. The
estimated mean technical efficiency of NonBT cotton farmers has been found to be 0.70, and 0.90 is the
technical efficiency found in that of the BT cotton farmers. Hence the average output of Non-BT cotton and
BT-cotton farms could be increased by 30 and 10 percent, respectively by adopting the technology with an
appropriate approach. The results of the inefficiency model reveal that the factors like education, experience
and distance from the main market, are the most influential determinants of the technical efficiency in both
NonBT and BT- cotton farms. Extension of cotton production required the development of cottonseed that
will be suitable for environmental conditions of Pakistan.
Agricultural credit plays a pivotal role in enhancing crop productivity by making possible easy access to essential inputs. The present study has been conducted during 2010-11 to investigate the effect of agricultural credit on wheat and cotton crops productivity in Sahiwal district. The data were collected from 100 farmers, among which half were loanee while the other half were non-loanee farmers. A Cobb Douglas production function was employed to assess the effect of various agronomic and production variables on productivity of wheat and cotton crops. The analysis estimated the coefficients of seed cost (scost), irrigation cost (ircost) and agricultural credit (dummy variable for credit) as 0.378, 0.098 and 0.026, respectively for wheat. All the variables were found to be highly significant for wheat crop. While in case of cotton, all variables except irrigation cost were significant at 1 percent while the variable of seed bed preparation was significant at 7 percent level of significance. Since agricultural credit has a significant role in enhancing the productivity of these crops, therefore, the study suggests of devising easy lending procedure, financing agricultural machinery on subsidized rates and creating the awareness regarding agricultural loans. These measures will enhance loan disbursement to farmers considered to be imperative for increasing productivity of wheat and cotton crops.
DOI: 10.5901/mjss.2015.v6n4s3p482
Sri Lanka is the world leader in made tea production and the small holding sector dominates national production by accounting for 60% of the island's tea production. However, given the high cost of production, there is a belief that it is very difficult to increase profitability without increasing costly inputs such as labour. With this background, in this study technical efficiency of the tea small holdings sector in the Mid Country Wet Zone of Sri Lanka was estimated in order to identify the potential to increase production without incurring any additional costs for inputs. The sources of inefficiency and the robustness of measured technical efficiency in various functional specifications was also investigated. The primary data collected during the period September -January 2001 relevant to sixty small holder tea producers in the Mid-country Wet Zone was used for the study. Maximum likelihood estimates of the stochastic frontier model were estimated for green leaf yield as a function of land extent, family labour, hired labour, fertilizer, chemicals, and dolomite, using Cobb-Douglas and translog models. The determinants of technical efficiency such as age of farmer, experience, education, occupation type of crop (VP/Seedling) and type of clone were investigated, following the Battese and Coelli (1995) specification. According to the Cobb-Douglas specification, extent of land, family labour, hired labour, fertilizer and dolomite showed significant effects on yield. The coefficients for land, family labour, hired labour and fertilizer had positive values of 1.11, 0.027, 0.067 0.029 and 0.004 respectively. The mean technical efficiency of the tea small holdings sector in the Mid Country Wet Zone was found to be 64.60 per cent. The result for the inefficiency model indicates that age of farmer, education, occupation, type of crop (VP or * The authors are, respectively, Final Year Undergraduate Student at the time the study was conducted, and Senior Lecturer in Agricultural Economics, University of Peradeniya. 138 seedling) and type of clone have significant effects on efficiency. The coefficients for age, education, occupation and type of crop showed negative values. However contrary to expectations, type of clone and experience showed positive values. The estimation with the translog model yielded different technical efficiencies, which indicates the fact that technical efficiency estimations are highly sensitive to the functional form specified.
The error term in the stochastic frontier model is of the form (v–u), where v is a normal error term representing pure randomness, and u is a non-negative error term representing technical inefficiency. The entire (v–u) is easily estimated for each observation, but a previously unsolved problem is how to separate it into its two components, v and u. This paper suggests a solution to this problem, by considering the expected value of u, conditional on (v–u). An explicit formula is given for the half-normal and exponential cases.
Stochastic frontier production function was used to determine technical efficiency and its determinants in potato production. Cobb Douglas production function was adopted. Results indicated that age of the respondents, consulting extension staff and cost of plant protection measures were positively related with technical efficiency. However, cost of fertilizer was negatively affecting technical efficiency. The main reason was injudicious use of fertilizer especially nitrogenous fertilizer. The mean technical efficiency level was 76% indicating that there exist a large potential to increase potato production in Pakistani Punjab. Results of the study suggest that by improving technical efficiency, food security problem could be handled to a great extent with available technology and resources.
The agriculture sector plays a crucial role in the overall development of the country. The sector shares about 24 percent of the GDP and employs about 44 percent of the workforce in the country. Crops sub-sector is the major contributor towards agriculture, sharing more than 53 percent of the value-added. Wheat, being the staple food of Pakistanis, carries immense importance: it contributes about 12 percent of sector value-added, is sown on about 37 percent of the total cropped area, and shares 80 percent in consumption of food grains, while its share in food grain production is around 70 percent. As primary diet, wheat alone shares about 50 percent of the total calories’ and proteins intake in Pakistan, and contributes about 8 percent of the total fat consumed [FAO (Various Issues]. Consequently, overall dietary well being of our people especially the urban and rural poor is largely dependent on the performance of wheat economy. Despite serious efforts made by the wheat breeders in developing new highyielding varieties during the past three decades, wheat production in Pakistan remained short of demand and thus import has been the only alternative to fill the gap. The present wheat requirement of the country is more than 20 million tonnes. It has been estimated that by the year 2020 wheat import would rise up to 15 million tones costing 2 billion US dollars [PARC (1996)]. The situation could worsen further if Pakistan fails to achieve a higher level of growth rate in wheat production and sustain it.
A time-varying efficiency effects approach using district level data of wheat in barani Punjab is used to disintegrate wheat output growth into different sources. The results show that wheat output grew at an annual rate of 2.71 percent under barani conditions, during the period of study. Technological change was the main driving force, sharing about 107 percent of this growth, while the changing inputs contributed negatively by about 10 percent and the efficiency contribution was less than 4 percent. On the other hand, irrigated output increased by about 4.7 percent per annum in the region; of which 65 percent, 1.3 percent, and 34 percent were attributable to technological change, change in efficiency, and increase in inputs. As regards the overall wheat output in the barani region of the Punjab, it grew at an annual rate of 2.97 percent—84 percent of which was shared by the barani lands and the remaining 16 percent was contributed by irrigated lands in the region. One common result which was observed under both barani and irrigated conditions was that the productivity growth (the sum of technological and efficiency change) showed declining trends exclusively due to negative trends in technical efficiency. Low relative profitability as compared to growing vegetables and raising livestock might be the main cause of this trend in the barani area: the same reason could also be a source of decline in efficiency. Rapid technological advancements require that farmers and administrators improve their management skills even to keep the productive efficiency at the same level. This is not possible without education and training along with a more effective flow of information [Lall (1993)]. Under these circumstances, the agricultural extension system has to play a greater role in assisting the farming community in the barani areas so as to adopt and use new technologies more rationally.
"The people operating small farms in developing countries have to cope with the risks of these small businesses and have long faced heavy challenges. Today, these challenges are particularly severe, and the aspirations of young people on small farms have changed. Globalization and the integration of international markets are stimulating intense competition, offering some opportunities but also new risks. In light of these pressures and others, many of the world's millions of small farmers are simply not making it. Indeed, half of the world's undernourished people, three-quarters of Africa's malnourished children, and the majority of people living in absolute poverty live on small farms. The transformation of the small-farm economy is one of the biggest economic challenges of our time. For some, it entails growth into specialized, market-oriented farms; for others, part-time farming combined with off-farm rural jobs; and for others, a move out of agriculture. The pathways of transformation differ by region and location and will take decades. Policy must take a long-run view to support and guide this process efficiently, effectively, and in social fairness. The role of women farmers and their livelihoods requires particular attention. In this paper, Peter Hazell, Colin Poulton, Steve Wiggins, and Andrew Dorward address several crucial questions. Do small farms in fact have a future? In what situations can small farms succeed? What strategies are most appropriate for helping to raise small-farm productivity? The authors review both sides of the debate over the future of small farms before coming to their conclusions. Coming down firmly on the side of policy support for small farms, they point to small farms' significant potential for reducing poverty and inequity. They also clarify the differing roles of and needs for small farms in different country contexts and spell out a policy agenda for promoting small-farm development. This discussion paper is based on a literature review and the deliberations of an international workshop, “The Future of Small Farms,” organized by the International Food Policy Research Institute (IFPRI) 2020 Vision Initiative, the Overseas Development Institute (ODI), and Imperial College London in Wye, England, from June 26 to 29, 2005. (A proceedings volume for this workshop is available from IFPRI, www.ifpri.org/events/seminars/2005/smallfarms/sfproc.asp.) We hope that this discussion paper will help stimulate renewed attention among many stakeholders— including policymakers, researchers, the private sector, and nongovernmental organizations—to small-scale agricultural development. Healthy and productive small farms could serve as a crucial mechanism for achieving the poverty and hunger Millennium Development Goals. " From Foreword by Joachim von Braun
Earlier papers by Aiger, Lovell and Schmidt and by Meeusen and van den Broeck have considered stochastic frontier production functions. this paper extends that work by considering the duality between stochastic frontier production and cost funstions, under the assumtions of exact cost minimization (tecchnical inefficiency only) and of inexact cost minimization (technical and allocative inefficiency). We show how to measure both types of inefficiency, and the associated cost of inefficiency. The techniques are illustrated using data on steam-electric generating plants.
It has now become almost a stylized fact that sustained agricultural growth is central to rapid poverty reduction and economic development. Yet, world poverty is largely concentrated in the agrarian societies, which have the potential for agricultural productivity growth. This is particularly true for Sub-Saharan African countries, where the gaps between potential and actual yields remain high. Minimizing this gap through the promotion of modern inputs—such as fertilizer and modern seeds—has been at the core of almost all development strategies in Ethiopia. Among other initiatives, the country has promoted microfinance institutions and member-owned financial cooperatives to alleviate credit constraints of the smallholder farmers. This paper analyzes the impacts of these institutions. Using household survey data and a propensity-score-matching technique, we examine the effects that institutional financial services have on farmers’ adoption of agricultural technology in Ethiopia. The results suggest that access to institutional finance has a significant positive impact on both the adoption and extent of technology use. However, when impacts are disaggregated by type of financial institution and farm size, heterogeneities are observed. In particular, financial cooperatives have a greater impact on technology adoption than microfinance institutions, and the results appear to vary depending on farm size and types of inputs. The paper concludes with implications for policies to promote adoption of modern agricultural inputs.
The paper tries to argue that Cobb-Douglas (CD) production function merits its use for analysing production process, not because it is looked as a simple tool which can be handled easily or is looked as a crude remedy for estimation ills, but because of the advantages it possesses. These advantages are due to the fact that it can handle multiple inputs in its generalised form. Even in the face of imperfections in the market it does not introduce distortions of its own. Unconstrained CD-function further increases its potentialities to handle different scales of production. Various econometric estimation problems, such as serial correlation, hetroscidasticity and multicolinearity can be handled adequately and easily. It is argued that most of its criticism is focussed on its inflexibility and admits that except for one obvious assumptions all other assumptions can be relaxed. It is further argued that it facilitates computations and has the properties of explicit representability, uniformity, parsimony and flexibility. Even the problem of simultaneity can be accounted for through the use of stochastic CD-production function. The paper argues that the technology can also be well represented by it.
Based on primary data collected in the Greater Letaba Local Municipality from 73 small-scale farmers in the 2006 season, this study used the probit modelling approach to analyse the influence household characteristics have on farmers' decision to use credit. The model predicted 84.93 per cent of the sample correctly. The results revealed that farming experience, gender and marital status have positive significant effect on farmers' decision to use credit. In contrast, farmers' age, education level and membership to farmers' association had negative significant effect. The study recommends training on the benefits of farm credit among both borrowers and non-borrowers in rural areas. Most borrowers were male-headed and these imply that targeting female-headed households will most likely improve their likelihood of taking credit. It is recommended that the full rollout of Micro Agricultural Finance Institutions of South Africa (MAFISA) and the imminent implementation of the Communal Land Rights Act (CLARA) will ease the collateral problems of these categories of farmers.
Empirical results obtained from the model included that the elasticities of wheat production ( i.e. the best production practices) was highest for area planted with wheat (0.783), it was followed by cultivations (0.323) and fertilizer (0.201). Next in importance were irrigations (0.046) availability of family labour (0.041) and use of weedicides (0.029). Higher seed rate tender to production efficiency because the farmers were already using higher seed rates than recommended doses. Low elasticities fro fertilizer and farm yard manure mainly due to their nominal use as compared to the plant nutrient requirements. Pakistani soils are generally deficiency in human content and are vastly saline/ sodic in characteristics. As a results crop response to fertilizer was low. Moreover extensive use of poor quality tubewell water in the study area, also explained poor crop response to fertilizer. Weedicides, too, were used sparingly, that is why their elasticity was low.
For the last couple of years several agricultural and trade experts have been advocating if Pakistan has to compete in the international market for export of agricultural products then it needs to decrease the cost of production. In the light of Agreement on Agriculture of WTO, member countries are required to provide increased market access, decrease domestic support and tariff. These agreements are likely to increase the cost of production of various agricultural products for farmers producing these products, and make international competition tougher for export of agricultural commodities. There are three possible ways to decrease the cost of production—by decreasing cost of inputs, by developing cost effective high yielding technologies or by improving management practices. There is little hope for decrease in the cost of inputs. Over the recent years prices of the petroleum products, were revised upward several times and this trend is likely to continue in future. Similarly, there was increase in the prices of gas, electricity and other agricultural inputs. Historically, in Pakistan, increase in prices of agricultural inputs has been much higher than the increase in prices of agricultural outputs [Pakistan (1988)]. Under these circumstances there is little hope of decease in prices of agricultural inputs. As far as development of new agricultural technologies, particularly high yielding varieties, is concerned it is a long-term process. It takes several years to develop a new variety and in its formal approval for distribution to farmers. Nevertheless, there is room for decreasing cost of producing through improvement in the management practices. When economists talk about improvement in the management practices they talk in terms of ‘technical efficiency’ and ‘allocative efficiency’. Technical efficiency has been defined as firm’s ability to produce maximum output given a set of inputs and technology.
Within the UK there has been a lack of studies of technical efficiency at the Scottish level. This note compares the results obtained using Scottish data with a recent study by Hadley ["Journal of Agricultural Economics" (2006) Vol. 57, pp. 81-100] for English and Welsh farms. Four major sectors are investigated, namely: (i) cereals, (ii) dairy, (iii) sheep and (iv) beef over the period 1989 to 2004. Some distinct differences in efficiencies, returns to scale and causes of efficiency are found. Copyright (c) 2008 The Author. Journal compilation (c) 2008 The Agricultural Economics Society.
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