Effects of partial quantity rationing of credit on technical efficiency of Boro rice growers in Bangladesh: Application of the stochastic frontier model
DOI:
https://doi.org/10.9755/ejfa.2021.v33.i6.2714Abstract
In this study, we analyzed the effects of the partial quantity rationing of credit on the technical efficiency of Boro rice growers in the Pabna district of Bangladesh. Before conducting the field survey, we designed a theoretical framework and identified farm households affected by the partial quantity rationing of credit. Data were collected from 174 Boro rice growers and analyzed in two stages, where the technical efficiency of Boro rice growers was assessed using stochastic frontier analysis, and the inefficiency effects model was then applied to evaluate determinants of the technical efficiency. The mean technical efficiency of Boro rice growers was 78%, which indicates that their technical efficiency was 22% beyond the production frontier curve. The variables comprising the household head’s age, education level, seed quality, formal training, access to the market, farm labor, tillage cost, fertilizer cost, irrigation cost, and price of seedlings significantly affected the technical efficiency of rice growers. The variables of interest comprising the rate and partial quantity rationing of credit had significant negative effects on the technical efficiency of rice growers. The findings obtained in this study will help to enhance the actual production level using the available resources and improve the food security situation in Bangladesh.
Downloads
References
Arshad, M., H. Kächele, T. J. Krupnik, T.S. Amjath-Babu, S. Aravindakshan, A. Abbas, Y. Mehmood and K. Müller. 2017. Climate variability, farmland value, and farmers’ perceptions of climate change: implications for adaptation in rural Pakistan. Int. J. Sustain. Dev. World Ecol. 24: 532–544.
Balcombe K., I. Fraser, M. Rahman and L. Smith. 2007. Examining the technical efficiency of rice producers in Bangladesh. J Int Dev. 19:1–16.
Bashir, M. K., Y. Mehmood. 2010. Institutional credit and rice productivity: A case study of District Lahore, Pakistan. China Agric Econ Rev. 2: 412–419.
Bashir, M. K., M. Yasir, H. Sarfraz. 2010. Impact of agricultural credit on productivity of wheat crop: evidence from Lahore, Punjab, Pakistan. Pakistan J Agric Sci. 47: 405–409.
BBS (Bangladesh Bureau of Statistics). 2018. Yearbook of Agricultural Statistics. Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Government of the People’s Republic of Bangladesh, Dhaka,: 1–587.
BBS (Bangladesh Bureau of Statistics). 2019. Yearbook of Agricultural Statistics. Bangladesh Bureau of Statistics, Statistics Division, Ministry of Planning, Government of the People’s Republic of Bangladesh, Dhaka, : 1–587.
Bibi Z., D. Khan and ul. I. Haq. 2020. Technical and environmental efficiency of agriculture sector in South Asia: a stochastic frontier analysis approach. Environ Dev Sustain. 23: 9260–9279.
Bidisha, S. H., M. A. Hossain, R. Alam and M. M. Hasan. 2018. Credit, tenancy choice and agricultural efficiency: Evidences from the northern region of Bangladesh. Econ. Anal. Policy. 57: 22–32.
Boucher, S. R., M. R. Carter and C. Guirkinger. 2008. Risk rationing and wealth effects in credit markets: Theory and implications for agricultural development. Am. J. Agric. Econ. 90: 409–423.
Cabrera, V. E., D. Solís and J. del Corral. 2010. Determinants of technical efficiency among dairy farms in Wisconsin. J. Dairy Sci. 93: 387–393.
Carrer, M. J., A. G. Maia, M. de Mello Brandão Vinholis and H. M. de Souza Filho. 2020. Assessing the effectiveness of rural credit policy on the adoption of integrated crop-livestock systems in Brazil. Land use policy. 92: 1-10.
Caudill, S. B., J. M. Ford, and D. M. Grqpper. 1995. Frontier estimation and firm-specific inefficiency measures in the presence of heteroscedasticity. J. Bus. Econ. Stat. 13: 105–111.
Charnes, A., W. W. Cooper, and E. Rhodes, E. 1978. Measuring the efficiency of decision making units. Eur. J. Oper. Res. 2: 429–444.
Diana, F., C. Guirkinger, and S. Boucher. 2010. Risk, credit constraints and financial efficiency in Peruvian agriculture. J. Dev. Stud. 46: 981–1002.
Duong, P. B. and P. TThanh. 2019. Adoption and effects of modern rice varieties in Vietnam: Micro-econometric analysis of household surveys. Econ. Anal. Policy. 64: 282–292.
FAO. 2018. Rice prices and growth, and poverty reduction in Bangladesh. Food and Agriculture Organization of the United Nations Rome.http://www.fao.org/3/I8332EN/i8332en.pdf
Jalilov, S., M. Mainuddin. 2019. Efficiency in the Rice Farming : Evidence from Northwest Bangladesh. agriculture. 9: 1–14.
FAOSTAT. 2014. Food and Agricultural Commodities Production. Retrieved on May 05, 2021 fromhttp://www.fao.org/faostat/en/#data/QC.
Fatemi, M. and A. Atefatdoost. 2020. The alternative model to predict adoption behavior of agricultural technologies. J. Saudi Soc. Agric. Sci. 19: 383–390.
Gautam, M., and M. Ahmed, M. 2019. Too small to be beautiful? The farm size and productivity relationship in Bangladesh. Food Policy. 84: 165–175.
Jalilov, S. M., M. Mainuddin, M. Maniruzzaman, M. M. Alam, M. T. Islam and M. J. Kabir. 2019. Efficiency in the rice farming: Evidence from northwest Bangladesh. Agric. 9: 1-14.
Jin, M., S. Zhao, And S.C. Kumbhakar. 2019. Financial constraints and firm productivity: Evidence from Chinese manufacturing. Eur. J. Oper. Res. 275: 1139–1156.
Jondrow, J., C. A. Knox Lovell, I. S. Materov and P. Schmidt. 1982. On the estimation of technical inefficiency in the stochastic frontier production function model. J. Econom. 19: 233–238.
Kattel, R. R., P. P. Regmi, M. D. Sharma and Y. B. Thapa. 2020. Factors affecting adoption of improved method in large cardamom curing and drying and its impact on household income in the Eastern Himalayan road-corridor of Nepal. Technol. Soc. 63: 1–13.
Komicha, H. and B. Öhlmer. 2008. Effect Of Credit Constraint On Production Efficiency Of Farm Households In Southeastern Ethiopia. Ethiop. J. Econ. 15: 2–32.
Kumar, A., H. Takeshima, G. Thapa, N. Adhikari, S. Saroj, M. Karkee and P. K. Joshi. 2020. Adoption and diffusion of improved technologies and production practices in agriculture: Insights from a donor-led intervention in Nepal. Land use policy. 95: 1-14.
Kumbhakar, S.C. and C. A. K. Lovell. 2000. Stochastic Frontier Analysis. Cambridge University Press. https://doi.org/10.1017/CBO9781139174411
Li, C., L. Lin and C.E.C. Gan. 2016. China credit constraints and rural households’ consumption expenditure. Financ. Res. Lett. 19: 158–164.
Li, W., B. Clark, J. A. Taylor, H. Kendall, G. Jones, Z. Li, S. Jin, C. Zhao, G. Yang, C. Shuai, X. Cheng, J. Chen, H. Yang and L. J. Frewer. 2020. A hybrid modelling approach to understanding adoption of precision agriculture technologies in Chinese cropping systems. Comput. Electron. Agric. 172: 1-12.
Long, L. K., L. Thap and N. T. Hoai. 2020. An application of data envelopment analysis with the double bootstrapping technique to analyze cost and technical efficiency in aquaculture: Do credit constraints matter? Aquaculture. 525: 1-11.
Mehmood, Y., K. Rong, M. Arshad and M. K. Bashir. 2017. Doliquidity constraints influence the technical efficiency of wheat growers? Evidence from Punjab, Pakistan. J. Anim. Plant Sci. 27: 667–679.
Mehmood, Y., K. Rong, M. K. Bashir and M. Arshad. 2018. Does partial quantity rationing of credit affect the technical efficiency of dairy farmers in Punjab, Pakistan?: An application of stochastic frontier analysis. Br. Food J. 120: 441–451.
Mehmood, Y., M. Arshad, H. Kaechele. 2021. Pesticide residues, health risks, and vegetable farmers’ risk perceptions in Punjab, Pakistan. Hum Ecol Risk Assess. 27: 846–864.
Mehmood, Y., M. Arshad, N. Mahmood. 2021. Occupational hazards, health costs, and pesticide handling practices among vegetable growers in Pakistan. Environ Res. 200: 1–9.
Min, S. H. I., K. P. Paudel, and C. Feng-bo. 2020. Mechanization and Efficiency in Rice Production in China. J Integr Agric. 19: 2–15.
Roy, R., N. W. Chan, and R. Rainis. 2014. Rice farming sustainability assessment in Bangladesh. Sustain. Sci. 9: 31–44.
Shew, A. M., A. Durand-Morat, B. Putman, L.L. Nalley and A. Ghosh, A. 2019. Rice intensification in Bangladesh improves economic and environmental welfare. Environ. Sci. Policy. 95: 46–57.
Tenaye, A. .2020. Technical efficiency of smallholder agriculture in developing countries: The case of Ethiopia. Economies. 8: 1–27.
Wang, J., X. Etienne and Y. Ma. 2020. Deregulation, technical efficiency and production risk in rice farming: evidence from Zhejiang Province, China. China Agric. Econ. Rev. 12: 605–622.
Zhao, J., and P. J. Barry. 2014. Effects of Credit Constraints on Rural Household Technical Efficiency.China. China Agric. Econ. Rev. 6 :654-668.
Zhao, J., J. Zhang and P. J. Barry. 2014. Do formal credit constraints affect the rural household consumption in China? Agric. Econ. (Czech Republic). 60: 458–468.