MSc.

Technological change and efficiency improvement are important sources of
productivity growth in any economy. The concept of technical efficiency (TE) is
based on input and output relationships. Technical inefficiency arises when actual or
observed output from a given input mix is less than a possible mix. The analysis of
technical efficiency involves the assessment of the degree to which the production
technologies are utilized.
The present investigation on “Formation and efficient estimation of stochastic
frontier production functions” was carried out in the Department of Agricultural
Statistics, College of Horticulture, Vellanikkara during 2010-13, to assess the present
economics of pepper cultivation, to formulate new stochastic frontier production
functions and to compare them. The secondary data collected from the Department of
Plantation Crops and Spices, College of Horticulture, Vellanikkara on area of
holdings, number of vines, yield, expenses for machinary, labour, manure, and other
expenses for the cultivation of pepper in the three blocks viz; Mananthavady,
Kalpetta and Bathery were used for the analysis.
The summary statistics revealed that irrespective of the blocks, the
expenditure on labour was the highest followed by expenditure on manure and it was
increasing according to the increase in age of plants.
For the stochastic frontier production model to be realistic, exact
measurement of the cost of the inputs as also the realized output is extremely
necessary. Very few farmers keep records of the expenditure incurred on the various
inputs and very rarely the output realized.
Vegetable crops have a short duration. So the farmer will be in a position to
give realistic figures regarding the various inputs as also the outputs. As regards
plantation crops, there will be a lag right from establishment of the crop to the steady
bearing stage. Therefore, it will be very difficult to trace back the exact cost, as no
records would be available about the costs incurred. A rapid estimation survey is the
only feasibility where in simultaneous estimation of the costs involved at from the
nursery through the various stages of growth can be observed.
Since a farmer who is already having a steady bearing crop, would have
incurred lesser costs through the previous stages of growth of the crop, it is most
feasible to use the concept of present worth to arrive at exact costs of previous stages
of the crop. The stochastic frontier analysis was done using the present value (PV) as
also with the present cost.
The stochastic frontier analysis (SFA) was done for all the three blocks
compounding all the costs starting from the nursery stage (First age group) up to the
steady bearing stage (Fourth age group) using PV. The mean technical efficiency was
observed to be 0.93, 0.91 and 0.94 for Mananthavady, Kalpetta and Bathery Blocks
respectively. The stochastic frontier approach for each age group by pooling over the
blocks, were also worked out using PV and it revealed a mean technical efficiency of
0.95 and 0.92 for the plantations in the third and fourth age groups respectively.
To assess the factors influencing technical efficiency, the regression of TE on
the factors like area of holdings, number of vines, cost for implements and
machinary, labour, manure and other expenses was fitted for each block. About 91
per cent of the variation in technical efficiency could be explained using these
variables. When the area of holdings increased, the technical efficiency seemed to
decrease. With proper labour management, the technical efficiency can be
significantly improved.