WSEAS Transactions on Business and Economics
Print ISSN: 1109-9526, E-ISSN: 2224-2899
Volume 17, 2020
Technical and Scale Efficiency Analysis of Cash Crops Production in Pakistan: An Application of Data Envelopment Analysis (DEA)
Authors: , , ,
Abstract: The study has analyzed the technical efficiency of major cash crops’ yield in Pakistan from 1948 till 2018. Cotton and sugarcane are the crops selected for analysis with an area of thousand hectares. For carrying out the analysis, data is taken from the Ministry of Food and Agriculture (MINFA), Pakistan Bureau of Statistics, and economic surveys of Pakistan of different years. The technique employed in the study is the non-parametric Data Envelopment Analysis (DEA) technique. The result obtained after technical efficiency analysis reveal the suboptimal cash crop yield in Pakistan throughout the analysis. The average technical efficiency of cotton and sugarcane crops from 1948 to 2018 are approximately 0.80 and 0.84 respectively. Furthermore, the result of scale efficiency analysis showed the monotonous performance of cash crops’ production. The consistent variation in cotton and sugar cane crops’ yield over the years reported by the efficiency analysis, accounts for Constant Return to Scale (CRS) and Variable Return to Scale (VRS) models, resulted in varying Return to Scale (RTS). The plausible reasons can be attributed to the Increasing Returns to Scale (IRS) or Decreasing Returns to Scale (DRS) in the case of cotton and sugarcane production. An interesting finding is unveiled that out of 70 years, cotton and sugarcane crops achieved the optimal scale efficiencies for only one year. The best possible level of output of cotton and sugarcane crops in the future can be achieved by allocating a lesser area under the cultivation of these crops in Pakistan. It is also imperative that farmers adopt and implement modern farm technologies. Increasing the area under crop production is not a solution, especially in the wake of alarming population growth and urbanization in Pakistan. The formulation of policies encouraging farmers requires modern farm inputs to realize the optimal yield of cash crops in Pakistan. The government should educate the farmers regarding advanced farming and efficient farm management techniques to help to augment the farm output without expansion of the area for these crops.
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Pages: 818-830
DOI: 10.37394/23207.2020.17.80