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Profit Efficiency among Paddy Farmers: A Cobb-Douglas Stochastic Frontier Production Function Analysis

Author

Listed:
  • Yahaya Kaka

    (Department of Agribusiness and Information System, Faculty of Agriculture, Universiti Putra Malaysia, UPM Serdang Malaysia)

  • Mad Nasir Shamsudin

    (Department of Agribusiness and Information System, Faculty of Agriculture, Universiti Putra Malaysia, UPM Serdang Malaysia)

  • Alias Radam

    (Department of Management and Marketing, Faculty of Economics and Management, Universiti Putra Malaysia, UPM Serdang, Malaysia)

  • Ismail Abd. Latif

    (Department of Agribusiness and Information System, Faculty of Agriculture, Universiti Putra Malaysia, UPM Serdang Malaysia)

Abstract

A multiple regression model based on Stochastic Frontier Profit Function which assumed Cobb-Douglass specification form was estimated using a cross-sectional data obtained from a sample of 397 Paddy households via Multi-stage and simple random sampling techniques. Maximum likelihood estimates of the specified profit model revealed that profit efficiencies of the producers varied between 30.5% and 94.8% with a mean of 73.2% suggesting that an estimated 26.8% of the profit is lost due to a combination of technical and allocative inefficiencies in Paddy production. Results from the technical inefficiency model revealed that credit education, farming experience, extension service, MR219 seed variety, broadcast planting method, machine broadcasting method and herbicides were significant factors influencing profit inefficiency. This shows that profit inefficiency in Paddy production could be shortened significantly with improvement in the level of the above socio-economics characteristics of the sampled farmers.

Suggested Citation

  • Yahaya Kaka & Mad Nasir Shamsudin & Alias Radam & Ismail Abd. Latif, 2016. "Profit Efficiency among Paddy Farmers: A Cobb-Douglas Stochastic Frontier Production Function Analysis," Journal of Asian Scientific Research, Asian Economic and Social Society, vol. 6(4), pages 66-75, April.
  • Handle: RePEc:asi:joasrj:2016:p:66-75
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    References listed on IDEAS

    as
    1. Mubarik Ali & John C. Flinn, 1989. "Profit Efficiency Among Basmati Rice Producers in Pakistan Punjab," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 303-310.
    2. Roslina Kamaruddin & Jamal Ali & Nariman Mohd. Saad, 2013. "Happiness and its Influencing Factors among Paddy Farmers in Granary Area of MADA," Abstract of Economic, Finance and Management Outlook, Conscientia Beam, vol. 1, pages 1-38.
    3. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    4. Jirong Wang & Eric J. Wailes & Gail L. Cramer, 1996. "A Shadow-Price Frontier Measurement of Profit Efficiency in Chinese Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 146-156.
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    Cited by:

    1. Muhammad Bala & Mad Nasir Shamsudin & Alias Radam & Ismail Abd. Latif, 2018. "Profit Efficiency among Cotton Farmers: A Cobb-Douglass Stochastic Frontier Production Function Analysis," Journal of Asian Scientific Research, Asian Economic and Social Society, vol. 8(7), pages 237-246, July.
    2. Lei Wang & Ruyin Long & Hong Chen, 2017. "Study of Urban Energy Performance Assessment and Its Influencing Factors Based on Improved Stochastic Frontier Analysis: A Case Study of Provincial Capitals in China," Sustainability, MDPI, Open Access Journal, vol. 9(7), pages 1-18, June.

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