ANALYSIS OF TECHNICAL EFFICIENCY OF RICE PRODUCTION IN PUNJAB (PAKISTAN) Implications for Future Investment Strategies

The study employed a Stochastic Frontier Production approach to determine the future investment strategies that can enhance the production of rice in Punjab, Pakistan. The data is collected from 200 farmers in the year of 2005 from two Tehsils of Sheikhupura district which is one of the major rice growing districts of Punjab province. The results of stochastic production function indicate that coefficient of pesticide is non significant probably due to heavy pest infestation while fertilizer is found to have negative impact on rice production mainly because of improper combination of N, P, and K nutrients. The improper combination of input use indicates poor dissemination of extension services. Therefore, the role of extension department should be strengthened to enhance the productivity of rice and to protect the major natural resource, ground water for future generations. The results of inefficiency model suggest that investment on tractor (mechanization) could significantly contribute to improve farmer’s technical efficiency, implying that the role of agricultural credit supply institutes (such as banks) needs to be redefined. Rice farmers are 9 percent technically inefficient, implying that little potential exists that can be explored through improvement in resource use efficiency. As a long run strategy, the investment on research related activities should be increased to shift the production technology.