Simultaneous Evaluation of Technical Efficiency and Production Risk of Rice Paddy Fields

AbstractAgricultural activities are inherently riskier than other types of production and are often accompanied by inefficiencies. Therefore, studying risk and inefficiency simultaneously can help enhance productivity. The statistical population in this study consisted of rice farmers in Rasht County. Based on data from the Agricultural Jihad Organization of Guilan province (2016), the total number of farmers at the time of the study was 38,763. Using Cochran’s formula, the required sample size was calculated to be 226, representing approximately 58 percent of the population. The questionnaire consisted of two parts: one focusing on the inputs used in the rice production process, and the other on the socio-economic characteristics of farmers and their farms. To simultaneously evaluate the technical efficiency and production risk of rice farmers in Rasht County in 2018, a generalized Stochastic Frontier Production (SFP) model with flexible risk properties was employed. The results of estimating production risk function showed that (i) rice production was significantly affected by land, seed and labour inputs; (ii) land, water, age, and gender variables were risk-increasing factors; (iii) seed, herbicides, machinery, farmer’s education, family size, and farming experience were risk-reducing inputs; (iv) seed, labour, membership in the agricultural cooperatives and insurance increased technical inefficiency; and (v) nitrogen fertilizer, water, gender, experience, and participation in educational and promotional programs reduce technical inefficiency in the studied area. The results of estimating technical efficiency showed that the average technical efficiency of the rice paddy field was 93.47 percent and 96.27 percent with and without a risk component, respectively. Therefore, it is clear that estimating the model without a risk component leads to biased results of technical efficiency. In conclusion, it is recommended that the risk component be considered when measuring the technical efficiency of paddy fields to achieve sound risk management and highly efficient production.