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Technical Efficiency in Agricultural Production and Its Determinants: An Exploratory Study at the District Level

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  • K.R. Shanmugam

    ()
    (Madras School of Economics)

  • Atheendar S. Venkataramani

    ()
    (Yale University School of Public Health, New Haven, CT 06520 (USA))

Abstract

Given the importance of agriculture to the well being of a large percentage of India’s population, it becomes important to study how improvements can be made in the productivity of this sector. This study attempts to estimate the technical efficiency – a measure of how well inputs are being used towards producing output – of about 250 Indian districts in 1990-91. It employs the stochastic frontier function methodology. The results indicate that (i) the land elasticity is the highest followed by fertilizer; (ii) the mean efficiency of raising agricultural output is 79 per cent and therefore there is a scope for increasing output by 21 per cent without additional resources; (iii) states such as Madhya Pradesh, Uttar Pradesh, and Rajasthan have the largest number of districts with below average TE and they stand to gain the most from policy interventions towards improving technical efficiency. The results further indicate that health, education, and infrastructure are powerful drivers of efficiency at the district level and the relative importance of the determinants of efficiency across districts depends greatly on environmental factors, such as agro-climatic zones, technological factors, and crop mix. The results highlight the need for developing policy strategies at a more localized level.

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Bibliographic Info

Paper provided by Madras School of Economics,Chennai,India in its series Working Papers with number 2006-010.

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Length: 17 pages
Date of creation: Jun 2006
Date of revision:
Handle: RePEc:mad:wpaper:2006-010

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Keywords: Agricultural Production;

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  7. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
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  14. K. Kalirajan, 1981. "An Econometric Analysis of Yield Variability in Paddy Production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 29(3), pages 283-294, November.
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