Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia

This study models technical inefficiency with production risk in inputs as two possible sources of the production variability that characterized Malaysian Paddy Production. Data from a total of 397 Paddy farms randomly sampled from MADA granary area were used for the analysis. The data for the st...

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Main Author:	Yahaya, Kaka
Format:	Thesis
Language:	English
Published:	2016
Subjects:	Rice - Malaysia Oryza sativa
Online Access:	http://psasir.upm.edu.my/id/eprint/67865/1/FP%202016%2070%20IR.pdf
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id	my-upm-ir.67865
record_format	uketd_dc
spelling	my-upm-ir.678652019-04-09T01:14:27Z Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia 2016-11 Yahaya, Kaka This study models technical inefficiency with production risk in inputs as two possible sources of the production variability that characterized Malaysian Paddy Production. Data from a total of 397 Paddy farms randomly sampled from MADA granary area were used for the analysis. The data for the study was sourced from the survey conducted for the period of 2014 farming season. The study employed a trans-log stochastic frontier production function model with flexible risk specification. The empirical estimates revealed that the mean output is positively influenced by seed, fertilizer, agrochemicals and labour. Fertilizer and agrochemicals are found to be riskreducing inputs, while seed and labour is revealed to be risk-increasing inputs. This by implication means that an average risk-averse producer is expected to use more of fertilizer and agrochemicals and less of seed and labour compared to risk-neutral producer in the study area. Several characteristics of farm operators such as age, education, marital status, household size, farming experience, extension visit, credit access, farm location, cultivation technology, MR219 and MR220CL2 seed variety, planting technology, broadcasting technology, agrochemicals use and harvesting technology were found to have significant effects on the technical inefficiency of paddy production in the study area. It was also revealed that extension visit, credit access, MR219 seed variety, MR220CL2 seed variety, method of broadcasting and harvesting technology significantly reduces the technical inefficiency of producers. The estimated technical efficiency indicates that the efficiency score is overstated when the production technology of the paddy farms is modelled without flexible risk component (87.1 percent) while it was found when estimated with risk component to be 83.6 percent. Profit efficiency of paddy farmers in the study area was also estimated. The model revealed that MADA farmers do not operate on the profit frontier. The average profit efficiency of 73.2 percent implies that, although farmers in the study area are relatively profit efficient, there are clear opportunities that exist for increasing their profit efficiency by almost an average of 27% through improving their technical and allocative efficiency. Rice - Malaysia Oryza sativa 2016-11 Thesis http://psasir.upm.edu.my/id/eprint/67865/ http://psasir.upm.edu.my/id/eprint/67865/1/FP%202016%2070%20IR.pdf text en public doctoral Universiti Putra Malaysia Rice - Malaysia Oryza sativa
institution	Universiti Putra Malaysia
collection	PSAS Institutional Repository
language	English
topic	Rice - Malaysia Oryza sativa
spellingShingle	Rice - Malaysia Oryza sativa Yahaya, Kaka Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia
description	This study models technical inefficiency with production risk in inputs as two possible sources of the production variability that characterized Malaysian Paddy Production. Data from a total of 397 Paddy farms randomly sampled from MADA granary area were used for the analysis. The data for the study was sourced from the survey conducted for the period of 2014 farming season. The study employed a trans-log stochastic frontier production function model with flexible risk specification. The empirical estimates revealed that the mean output is positively influenced by seed, fertilizer, agrochemicals and labour. Fertilizer and agrochemicals are found to be riskreducing inputs, while seed and labour is revealed to be risk-increasing inputs. This by implication means that an average risk-averse producer is expected to use more of fertilizer and agrochemicals and less of seed and labour compared to risk-neutral producer in the study area. Several characteristics of farm operators such as age, education, marital status, household size, farming experience, extension visit, credit access, farm location, cultivation technology, MR219 and MR220CL2 seed variety, planting technology, broadcasting technology, agrochemicals use and harvesting technology were found to have significant effects on the technical inefficiency of paddy production in the study area. It was also revealed that extension visit, credit access, MR219 seed variety, MR220CL2 seed variety, method of broadcasting and harvesting technology significantly reduces the technical inefficiency of producers. The estimated technical efficiency indicates that the efficiency score is overstated when the production technology of the paddy farms is modelled without flexible risk component (87.1 percent) while it was found when estimated with risk component to be 83.6 percent. Profit efficiency of paddy farmers in the study area was also estimated. The model revealed that MADA farmers do not operate on the profit frontier. The average profit efficiency of 73.2 percent implies that, although farmers in the study area are relatively profit efficient, there are clear opportunities that exist for increasing their profit efficiency by almost an average of 27% through improving their technical and allocative efficiency.
format	Thesis
qualification_level	Doctorate
author	Yahaya, Kaka
author_facet	Yahaya, Kaka
author_sort	Yahaya, Kaka
title	Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia
title_short	Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia
title_full	Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia
title_fullStr	Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia
title_full_unstemmed	Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia
title_sort	production risk and technical inefficiency of paddy farms in mada granary area, malaysia
granting_institution	Universiti Putra Malaysia
publishDate	2016
url	http://psasir.upm.edu.my/id/eprint/67865/1/FP%202016%2070%20IR.pdf
_version_	1747812529643454464

Production risk and technical inefficiency of paddy farms in MADA granary area, Malaysia

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