Agricultural Productivity, Efficiency, and Rural Poverty in Irrigated Pakistan: A Stochastic Production Frontier Analysis

Munir Ahmad

Abstract


The main objective of this study is to estimate the input
elasticities of production for poor and non-poor farms. The study
estimates the stochastic frontier production function. The results show
that the elasticities of production differ for poor and non-poor farms.
The production elasticity of land is substantially higher on rich farms
as compared to the farms belonging to poor farmers. This implies higher
returns on investment on land by the rich farmers. The salinity/sodicity
problem and the tail-end location of the plot adversely affect farm
productivity and efficiency, particularly at the poor farms. Moreover,
the average cost of the existence of technical inefficiencies is about
43 percent in terms of loss in output, with wide variations across farms
ranging from 17 percent to 62 percent. The study further concludes that
the least efficient group is not only operating far below the frontier
but it also operates at the lower portion of the production frontier.
Consequently, increasing access to the inputs would likely raise
productivity and reduce poverty. The results imply that the land
distribution using the notion of land reforms in favour of poor/small
farmers in the presence of existing farm structure, rural
infrastructure, and the weak farm-supporting institutions is not
expected to raise farm productivity and reduce poverty among the poor
farmers. The results call for a strong and active role of the government
in close partnership with the private sector to initiate
income-generating activities and inputs supply chains in the rural areas
to break the nexus of poverty, land degradation, and low agricultural
productivity.

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DOI: https://doi.org/10.30541/v42i3pp.219-248

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