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Measurement of Allocative Efficiency of Sugarcane Farms in District Charsadda-Khyber Pakhtunkhwa

Measurement of Allocative Efficiency of Sugarcane Farms in District Charsadda-Khyber Pakhtunkhwa

Amjad Ali1, Abbas Ullah Jan1, Lal Almas2, Noor Piao Khan1 and Khurran Nawaz Saddozai

1Department of Agricultural and Applied Economics, The University of Agriculture Peshawar, Khyber Pakhtunkhwa, Pakistan; 2Agricultural Business and Economics, West Texas AandM University, Canyon, TX USA.  


According to agricultural trade experts Pakistan need to reduce cost of production in order to compete in the international market. At national level food group exports decline from 3,439.4 million US$ during 2015 to 3040.7 in 2016. Increase in productivity and efficiency has been the major concern for agricultural researchers and policy makers in Pakistan. In current study allocative efficiency of sugarcane growers in district Charsadda was worked out with frontier model. Randomly 118 sugarcane growers were interviewed during crop season 2014-2015. For survey data a pre-tested structured questioner set according to objectives of the study was used. Coefficients of parameters were calculated by maximum likelihood estimation techniques. Per acre total yield, land rent and per acre inputs cost (labor hired, seed, tractor hours, irrigation, Urea, DAP, FYM and pesticides) were considered determinants for cost function. Respondent age, farming experience, education, family size, off-farm income, farm to home distance, tenancy and extension contacts are determinants in allocative inefficiency model. Results of the study revealed that except farmyard manure and pesticides all other explanatory variables are significant influencing factors in total cost of sugarcane production in district Charsadda. In socio-economic characteristics family size and extension contacts show negative correlation with allocative inefficiency. Mean allocative efficiency was found 63% with range from minimum 36% to maximum 90%. The presence of allocative inefficiency indicates that the average growers can reduce his cost of production (Rs.77,083/- per acre) up to 30% without any decrease in output level. Attractive output prices, timely payment and provision of quality extension services would help farmers to redirect their scarce resource allocation and reduce allocative inefficiency. 


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Sarhad Journal of Agriculture


Vol. 36, Iss. 2, Pages 374-733


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