Estimation of Production Efficiency for Wheat Producing States in India Using Stochastic Frontier Approach

Abstract

The paper examines the production efficiency of wheat producing states of India using state level data for the periods 1990-91 to 2004-05 and 2005-06 to 2013-14 using stochastic production frontier model proposed by Battese and Coelli (1995). The results show that inefficiency is present in agricultural production of the states where mean efficiency estimates ranges from 0.8776 to 0.6634 for 1990-91 to 2004-05 and from 0.9611 to 0.6167 for 2005-06 to 2013-14. For both sub-periods, institutional credit, net irrigated area and consumption of fertilizers are seen to have a significant positive impact on agricultural production in these states. Total state road length per unit of area is seen to be statistically significant in reducing inefficiency for the period 1990-91 to 2004-05. For 2005-06 to 2013-14, the  variables  found  to  be  statistically  significant  for  the  variations  in  technical efficiency are rate of rural literacy, rate of technical education, share of agricultural NSDP to state NSDP and total state road length per unit of area.