Agriculture Reference
In-Depth Information
In determining the predictors of production efficiency, we use the single stage approach
proposed by Battese and Coelli (1995) wherein the technical inefficiency parameter is related to
a vector of farm-specific managerial and household characteristics subject to statistical error,
such that:
u
=
Z
δ
+
ζ
≥
0
(2)
i
i
i
where,
Z
i
are the farm-specific managerial and household characteristics and the error
ζ
i
is
distributed as
2
ζ
N
~
(
0
σ
)
u
≥ 0
ζ
≥
−
Z
δ
. Since
, so that the distribution of
ζ
i
is
i
i
i
i
truncated from below at the variable truncation point, -
Z
i
δ
.
The production efficiency of farm
i
in the context of the stochastic frontier production
function is defined as:
0
∑
EFF
=
E
[exp(
−
u
)
|
ξ
]
=
E
[exp(
−
δ
−
Z
δ
|
ξ
)
(
(3)
i
i
i
i
i
where
E
is the expectation operator. This is achieved by obtaining the expressions for the
conditional expectation
u
i
upon the observed value of ξ
i
, where ξ
i
= v
i
- u
i
. The method of
maximum likelihood is used to estimate the unknown parameters, with the stochastic frontier
and the inefficiency effects functions estimated simultaneously. The likelihood function is
expressed in term of the variance parameters, σ
2
= σ
v
2
+ σ
u
2
and γ = σ
u
2
/σ
2
(Battese and
Coelli, 1995).
Selection of the Study Area and Sample Farmers
Wheat is cultivated almost all over the country though the intensity of planted area and
land suitability are not equal in all regions. Therefore, we computed a wheat area index for
each greater district
1
. The wheat area index for the
j
th district is expressed as:
WI
=
(
Area
/
GCA
)
*
100
,
(4)
j
j
j
where
WI
is the wheat area index,
Area
is the wheat area and
GCA
is the gross cropped area.
Based on this index, wheat growing regions were classified into three levels of intensity: high
intensity (
WI
>8.0), medium intensity (4.01<
WI
<8.0), and low intensity areas (
WI
<4.0).
A multistage sampling procedure was adopted to select the sample farmers. First, three
wheat growing regions (two from high intensity areas - Dinajpur and Rajshahi, and one from
medium intensity areas - Jamalpur) were selected purposively
2
. The selected three
1
Although there are 64 districts in Bangladesh, most secondary data are still reported at the level of these 21 former
greater districts.
2
The low intensity area is excluded because it is assumed that wheat production has limited potential in these
districts.
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