MEASUREMENT OF ECONOMIC EFFICIENCY OF PRODUCING FISH IN BANGLADESH WITH TRANSLOG STOCHASTIC COST FRONTIER

A Translog stochastic frontier cost function was estimated to determine the economic efficiency of fish production in Bangladesh. Economic inefficiency effect model was also estimated simultaneously with stochastic frontier to identify factors which influence efficiency. The coefficients of age and experience were negative and significant in the stochastic frontier which meant that cost of fish production decreased with the increases in age and experience of farm operator. The sign of farm size was positive and significant in inefficiency effect model, which meant that the large farmer was economically less efficient than small farmer. The economic efficiency varied from 15% to 99% at aggregate level, 96% to 98% in Mymensingh and 63% to 99% in Rangpur region. The mean economic efficiencies were 97%, 89% and 71% for Mymensingh, Rangpur and all regions, respectively. There appeared to be 3%, 11% and 29% economic inefficiencies for Mymensingh, Rangpur and all regions, respectively. This study indicated that cost of production could be reduced by 29% keeping the output constant at the aggregated level. For policy option, extension service should be made available for all fish farmers. Education should be another one of the top priorities of the government to develop the necessary human capital for sustainable development of the fishery sector