1998•The Pakistan Development ReviewOpen access

Stochastic Frontier and Technical Efficiency of Farms in Irrigated Areas of Pakistan's Punjab

Abid Aman Burki, Haq Nawaz Shah

Abstract

This paper presents new evidence on technical efficiency and its sources by examining the cost behaviour of 387 farms and whole-farm data from five irrigated districts of Punjab. Fitting translog variable cost frontier we find that technical inefficiency raises the cost of average sample farms by 24 percent that could have been saved had the farms been technically efficient. Our results enable us to conclude that farm efficiency is positively related to formal schooling of farm operators, abundance of canal water, and head reaches of mogha, and negatively to farm size, while the age of farm operators has no effect on efficiency.

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Key concepts: Inefficiency, Frontier, Economics, Sample (material), Agricultural economics, Agricultural science, Stochastic frontier analysis, Production–possibility frontier