Investigating Yield Variability and Inefficiency in Rice Production: A Case Study in Central China

Insufficient and high variability in rice yield is a threat to food security in China, prompting the need for strategies to mitigate yield variability and increase productivity. This study investigates the presence of production risk and technical inefficiency for a sample of rice farms in the Xiangyang city of China using a stochastic production frontier framework. Results from the risk function reveal that labor and better soil quality have significant risk-reducing effects while machinery exerts a significant risk-increasing effect on rice production. The estimated mean technical efficiency score is 84%, suggesting that, on average, farmers could increase their rice production by 16%, without increasing the existing input levels by improving their management techniques. Factors that significantly affect technical efficiency are the age of farmers, female ratio, access and use of extension services, off-farm income, and the size of cultivated land. Results from this study suggest that yield variability and technical inefficiency in rice production can be reduced by appropriate choice of input combinations and elimination of mistakes in the production process through efficient management practices. Strategies, such as providing better extension services, loosening liquidity constraints facing farmers, and expanding rice farmers’ producing area, would help to achieve minimum inefficiency in production.