Abstract:
In economics, it is well recognized that resources involved in the production process are limited
in supply and the scare resources should be efficiently used without wasting. Efficient utilization depends on managerial ability of entrepreneurs-farmers, firm, etc. Available literature
suggests that farmers in the developing countries fail to exploit the full potential of a technology and make allocative errors. Thus, increasing the efficiency in production assumes greater
significance in attaining potential output at the farm level. However it is an undeniable fact
that the majority of dry zone paddy farmers are characterized by poor economic status due to
inefficient utilization of available resources. This paper investigates the economic and technical efficiency of paddy farming in a minor irrigation scheme in Sri Lanka and to suggest some
policy recommendation for improving the efficiency of resource use.The experiment sites were
four minor tanks in Tricomalee district and respective tanks were randomly selected based on
the list of the village tank in same district. The empirical study was carried based on a sample of
158 farmers in selected tanks. In this study, the technical efficiency of paddy farmers was estimated by using stochastic frontier production function, incorporating technical efficiency effect
model. The Cobb Douglas production function was found to be an adequate representation of
the data.According to the results obtained from the stochastic frontier estimation, the average
technical efficiency of selected farmers given by the Cobb Douglas model is 69.08 per cent. This
indicates that there is scope of farther increasing the output by 30.2 percent without increasing
the level of input. With imputed cost profit margin of paddy farming under village tanks was
Rs.0.27 per kg and Break even yield was 3,505 kg per ha.The analysis using the Cobb-Douglas
function indicated miss-allocation of resources in most of the location in the sample area due to
managerial inability of farmers.
