PROFIT EFFICIENCY AMONG BANGLADESHI RICE FARMERS

Production inefficiency is usually analysed by its two components - technical efficiency and allocative efficiency. In this study we provide a direct measure of production efficiency of the Bangladeshi rice farmers using a stochastic profit frontier and inefficiency effects model. The data, which is for 1996, includes seven conventional inputs and several other background factors affecting production of modern or high yielding varieties (HYVs) of rice spread across 21 villages in three agro-ecological regions of Bangladesh. The results show that there are high levels of inefficiency in modern rice cultivation. The mean level of profit efficiency is 77% suggesting that an estimated 23% of the profit is lost due to a combination of both technical and allocative inefficiency in modern rice production. The efficiency differences are explained largely by infrastructure, soil fertility, experience, extension services, tenancy and share of non-agricultural income.Stochastic profit frontier, profit efficiency, Bangladesh, Crop Production/Industries, Productivity Analysis, O33, Q18, and C21.,

REGIONAL PRODUCTIVITY DIFFERENCES AND PROSPECT FOR CONVERGENCE IN BANGLADESH AGRICULTURE, 1964-1992

This paper applies the sequential Malmquist index to calculate multi lateral, multi-factor productivity (MFP) indices for agriculture in 16 regions of Bangladesh from 1964 to 1992 and examines convergence among regions. Productivity grew at an average rate of 2.2% per annum, led by regions with high level of Green Revolution technology diffusion. The growth mainly occurred due to technological progress estimated at 2.1% per year. Overall technical efficiency declined slightly at 0.1% per year due to falling technical efficiency in most of the regions in later years. Both cross-section and time series tests confirmed that divergence among regions disappeared and agricultural productivity reached convergence in the long run.Agricultural productivity, Regional variations, Convergence, Bangladesh, Productivity Analysis, O4, Q1,

Determinants of Crop Choices by Bangladeshi Farmers: A Bivariate Probit Analysis

Using a bivariate probit model, the study jointly determines the factors underlying the probability of Bangladeshi farmers adopting a diversified cropping system and/or modern rice technology. Results reveal that the availability of irrigation is the single most important determinant of the decision to adopt modern rice technology, and adoption is higher among the tenant farmers. The exact opposite is true for the likelihood of adopting a diversified cropping system, which is significantly higher in areas with no irrigation as well as among the owner- operators. Furthermore, the diversified cropping system has a significantly higher rate of adoption in regions with developed infrastructure. Farmers' education, farming experience, farm asset ownership, and non-agricultural income all positively influence crop diversification. Also, small farmers are more likely to adopt a diversified cropping system. Significant regional variation exists in the level of crop diversification as well. The decision to adopt a diversified cropping system and/or modern rice technology is significantly correlated, implying that a univariate analysis of such decision is biased. Crop diversification can be promoted by investing in farmers' education as well as rural infrastructure development. Also, land reform policies focusing on delegating land ownership to landless and marginal farmers, and tenurial reforms are noteworthy.

Farm Productivity and Efficiency in Rural Bangladesh: The Role of Education Revisited

This paper reassesses the debate over the role of education in farm pro duction in Bangladesh using a large dataset on rice producing hous eholds from 141 villages. Average and stochastic production frontier functions are estimated to ascertain the effect of education on productivity and efficiency. A full set of proxies for farm education stock variables are incorporated to investigate the 'internal' as well as 'external' returns to education. The external effect is investigated in the context of rural neighborhoods. Our analysis reveals that in addition to raising rice productivity and boosting potential output, household education significantly reduces production inefficiencies. However, we are unable to find any evidence of externality benefit of schooling. We discuss the implication of these findings for rural education programs in Bangladesh.Agriculture, returns to education, stochastic production frontier, Bangladesh, Labor and Human Capital, Productivity Analysis, I21, Q12, N5,

Growth in Agricultural Productivity and Its Components in Bangladeshi Regions (1987–2009): An Application of Bootstrapped Data Envelopment Analysis (DEA)

The present study applies a bootstrapped data envelopment analysis (DEA) procedure to compute bias-corrected measures of agricultural total factor productivity (TFP) change and its components (technical change and technical efficiency change) using a panel data of 19 regions of Bangladesh covering a 23-year period (1987–2009), thereby overcoming the limitation of the lack of statistical inference of the conventional non-parametric DEA. Results revealed that overall productivity grew at a modest rate of 0.03%, mainly powered by technological progress at 0.03% and a negligible decline in technical efficiency at 0.004% with large disparities amongst regions. Six regions in the middle order shifted ranks with regard to TFP change following bias correction. The estimated confidence intervals demonstrated that many regions underwent either progress or regress in productivity performance over time. Investments in research and development (R&D), agricultural extension, and crop diversification are suggested to improve regional inequality and declining technical efficiency

Productivity and soil fertility relationships in rice production systems, Bangladesh

This paper presents an econometric analysis of the influence of soil fertility status on productivity and resource use in rice production utilizing survey data from 21 villages in three agro-ecological regions of Bangladesh. Detailed crop husbandry input–output data were collected from 380 paddy rice (Oryza sativa) farmers. Data collected included fertilizer, pesticide, labour, animal power services, irrigation, farm capital assets and rice yield. The soil fertility status in each region was determined by analysis of soil organic carbon, available nitrogen, phosphorus and potassium concentration. Analysis was based on a profit function, where the selected soil fertility parameters were incorporated as yield controlling variables. Results revealed that soil fertility has a significant influence on both productivity and farmers’ resource allocation decisions. Output supply was significantly higher in fertile regions and input use was significantly lower. This observation indicates that in policy terms technological initiatives should be targeted at measures to identify areas of lower soil fertility so that inherent soil-based productivity restrictions can be minimized. In part this will be facilitated by the transfer of indigenous knowledge from farmers in higher productivity areas, thus increasing rice production and raising the competitiveness of Bangladeshi rice farmers

Determinants of livelihood choices: an empirical analysis from rural Bangladesh

The study identifies socio-economic determinants of livelihood choices of rural households in Bangladesh (4,195 households from 139 villages) by applying a multinomial logit model of occupational choice and a multivariate Tobit model that allows for jointness in decision making. Results reveal that households choose multiple livelihood options. A number of socio-economic factors and resources at the household level as well as the state of rural infrastructure significantly determine households’ livelihood choice. Overall, resource-rich and educated households engage in diversified livelihoods and rural infrastructure promotes such diversification. Female-headed households fail to participate in any of the livelihood categories and consequently earn significantly lower income. Policy implications include investment in rural infrastructure, irrigation, rural electrification, education, livestock resources, as well as targeting of female-headed households, for example, creation of a hired labour market and skills/education programmes for females

Total Factor Productivity and the Efficiency of Rice Farms in Bangladesh: a Farm Level Panel Data Comparison of the Pre- and Post-Market Reform Period

The market reform policy in agriculture and the trade liberalization during the early 1990s has led to structural changes in the agricultural sector of Bangladesh. The question of whether market reform policies in Bangladesh facilitated rice production is examined in this paper. This paper uses stochastic frontier production function to measure total factor productivity (TFP), technical change, and technical efficiency change covering the period of pre-market reform (1987) and post-market reform (2000 and 2004). To fulfill the objective, the study used panel data of 73 same farm households from a field survey of 1987–1988, 1999-2000 and 2003-04. It is evident from the study results that over time period (1987-2004), the TFP increased (31.76%) only due to upward shift in the technology. Technological change increased 59.99% in post reform period. However, although TFP increased substantial inefficiencies remain in Bangladesh rice sector. Technical efficiency change (-34.46%) developed negatively over the years of study at farm level. Market reform policy has negative impact on technical efficiency change but positive in technical change and TFP change although all are declining over the time period. Therefore, government policies need for further reform of domestic market and trade policies focusing on institutional changes, tariff and nontariff barriers in order to develop a competitive environment in rice sector.Farm Management,

Economic drivers of contemporary smallholder agriculture in a transitional economy: a case study of Hu Village from southwest China

Based on an in-depth case study of a rural community, this paper documents the contemporary state of Chinese smallholder agriculture and the changes that it has been experiencing in the context of dramatic socio-economic transition through the lens of three main economic drivers: livelihood diversification, market conditions and government interventions. Results reveal that the change in Chinese smallholder agriculture has been complex and multidimensional. All three factors exert profound influence and shape the current state of Chinese agriculture. Massive rural-urban migration has resulted in labour shortages, which in turn have led to a reduction in agricultural diversity and land use intensity and a shift from traditional labour-intensive technologies to modern capital-intensive technologies. However, because of well-developed agricultural markets, input use levels are similar across farmer categories (such as income diversification), helping to maintain productivity. Furthermore, reduced profits from farming due to increasing input prices and decreasing output prices have exerted pressure on smallholders to increasingly turn to nonfarm activities and have also triggered a thriving informal land transfer market, which was previously non-existent. Policy implications include the need to strengthen local economies, improve market conditions, invest in rural infrastructures and facilitate smallholders’ mobility

Commercial energy demand forecasting in Bangladesh

Although both aggregate and per capita energy consumption in Bangladesh is increasing rapidly, its per capita consumption is still one of the lowest in the world. Bangladesh gradually shifted from petroleum-based energy to domestically sourced natural-gas-based energy sources, which are predicted to run out within next two decades. The present study first identified the determinants of aggregate commercial energy and its three major components of oil, natural gas, and coal demand for Bangladesh using a simultaneous equations framework on an annual database covering a period of 47 years (1972–2018). Next, the study forecast future demand for aggregate commercial energy and its three major components for the period of 2019–2038 under the business-as-usual and ongoing COVID-19 pandemic scenarios with some assumptions. As part of a sensitivity analysis, based on past trends, we also hypothesized four alternative GDP and population growth scenarios and forecast corresponding changes in total energy demand forecast. The results revealed that while GDP and lagged energy demand are the major drivers of energy demand in the country, we did not see strong effects of own- and cross-price elasticities of energy sources, which we attributed to three reasons: subsidized low energy prices, time and cost required to switch between different energy-mix technologies, and suppressed energy demand. The aggregate energy demand is expected to increase by 400% by the end of the forecasting period in 2038 from its existing level in 2018 under the business-as-usual scenario, whereas the effect of COVID-19 could suppress it down to 300%. Under the business-as-usual scenario, the highest increase will occur for coal (3.94-fold), followed by gas (2.64-fold) and oil (2.37-fold). The COVID-19 pandemic will suppress the future demand of all energy sources at variable rates. The ex ante forecasting errors were small, varying within the range of 3.6–3.7% of forecast values. Sensitivity analysis of changes in GDP and population growth rates showed that forecast total energy demand will increase gradually from 3.58% in 2019 to 8.79% by 2038 from original forecast values. Policy recommendations include capacity building of commercial energy sources while ensuring the safety and sustainability of newly proposed coal and nuclear power installations, removing inefficiency of production and distribution of energy and its services, shifting towards renewable and green energy sources (e.g., solar power), and redesigning subsidy policies with market-based approaches