Efficiency Analysis of Wheat Farmers of District Layyah of Pakistan

Abstract

Like many other developing countries, Pakistan has lower agricultural productivity. It is due to the reason that the farming community is almost illiterate and, has traditional and conservative farming practices. Adoption and diffusion of new technology at farm level is hindered due to these factors. This study aimed at estimating; technical, allocative and economic efficiency. The determinants of inefficiency for the wheat farms in district Layyah were also quantified. Data of 120 farmers for the crop year 2010-11 were used for the analysis purpose. A non-parametric approach, Data Envelopment Analysis (DEA) was used to find out the efficiency scores. Separate regression was used for these inefficiency scores for socio-economic and farm specific variables by using a Tobit regression model. The results showed that mean technical, allocative and economic efficiency of farms in the sample area was 84, 81 and 68 percent, respectively. Results of Tobit regression models showed that impact of years of schooling, access to credit, number of contacts with extension agents, and distance of farm from main road were negative and significantly affecting technical inefficiency of wheat farms. The farm size variable sign was negative and had significant impact on the allocative inefficiency. The coefficient of access to credit dummy variable was positive and had significant impact on allocative inefficiency. The coefficient of distance from main road was negative and significant which implied that as the distance of farm from main road increased the economic inefficiency will decreases. Quantified results urged the need of improvement in the agri-extension services, timely and proper availability of inputs, and establishment of local level markets at lower administrative units (like, town or union council) for the improvement of existing farming system.