Effects of Credit Constraints on Technical Efficiency of Dragon Farmers: Evidence from the District of Jhenaidah and Chuadanga

This study examines the impact of credit constraints on the technical efficiency of dragon fruit farmers in the Jhenaidah and Chuadanga districts of Bangladesh. The data was gathered from 160 dragon farmers in the Jhenaidah and Chuadanga districts of Bangladesh using a simple method of random sampling. Prior to carrying out a field survey, a theoretical model was developed to distinguish between dragon farmers who are bound by credit and those who are not constrained. The acquired data was analyzed in two steps. Firstly, we examined the technical efficiency of dragon farmers using the stochastic frontier model (SFA). Secondly, we employed an inefficiency effect model to evaluate the impact of credit constraints on technical efficiency. The findings suggest credit-constrained dragon farmers (CCDF), are 5.31% fewer technical skills compared to credit non-constrained dragon farmers (CNDF). The results also demonstrate that the educational level of the household head, the number of family members, the usage of certified seeds, the timing of sowing, access to agricultural extension services, income from non-farm activities, and the amount of savings in the household all have an important impact on the technical efficiency of both categories of dragon farmers. Moreover, the magnitude of the credit has a significantly positive effect, whereas the interest rate applied to the principal amount has a significantly adverse effect.