Technical Efficiency of Agricultural Farms in Khulna, Bangladesh: Stochastic Frontier Approach

This paper uses the stochastic frontier approach to measure technical efficiency level of the agricultural farms of Khulna, Bangladesh. It considers three sub-sectors: rice cultivation, fish cultivation and livestock rearing. About 76%, 81%, and 73 % variations in output are due to technical inefficiency for the farms of the three sub-sectors, respectively. The highest variation in output (due to inefficiency) is found in the fish cultivation sub-sector. The sample farms are operating at an inefficient level and the inefficiency level decreases over time for the sub-sectors. The farming experience of the farmers and the availability of the credits significantly and positively affect the efficiency level of the farms. This study finds the necessity of redefining and redesigning the credit instrument for maintaining sustainability in the long run. It is also found that all the three sub-sectors have a chance to increase their production level with the same set of technology