AN APPLICATION TO PADDY FARMERS IN SOUTHERN REGION OF TAMIL NADU USING NORMAL-HALF NORMAL COBB-DOUGLAS STOCHASTIC PRODUCTION FRONTIER MODEL

Abstract

The present study attempted to estimate the technical efficiency of paddy farmers in Thiruvarur district, Tamil Nadu, India using Normal-Half normal Cobb-Douglas Stochastic Frontier Model, to know the variations in efficiency among the farmers and to analyze the policy making decisions for improving the efficiency. Primary data from 100 households in Thiruvarur district of Tamil Nadu during the year 2015-16 were used. The average technical efficiency was 89%, which implied that the sample farmers realized 89 percent of their technical abilities. The maximum estimated technical efficiency was 97% while the minimum was 37%. Based on the technical efficiency, the average potential to increase the paddy production was 8.25% and if the minimum technical efficiency farmers enable to achieve the maximum level of efficiency, then the cost can be save up to 61.5%.The MLE results showed that farm yard manure plays a major role in paddy production, also age and experience in farming had reduced technical inefficiency.

Keywords-Normal-Half normal distribution, Cobb-Douglas production function, stochastic production frontier model, Technical Efficiency, Maximum likelihood estimates.