The Journal of Developing Areas

This paper assesses estimates of technical, allocative and economic efficiency of farms using farm-level survey data for rice farmers in Bangladesh. We apply the stochastic efficiency decomposition technique and Data Envelopment Analysis (DEA). Inefficiency effects are modelled as a function of farm-specific human capital variables, irrigation infrastructure and environmental factors. The results from both the approaches show that there is substantial technical, allocative and economic inefficiency in production and that analysis of technical, allocative and economic inefficiency in terms of land fragmentation, irrigation infrastructure and environmental factor are robust. Policies leading to reduction of land fragmentation and improvement of irrigation infrastructure and environmental factors could promote technical, allocative and economic efficiency, reduce yield variability and enhance farm income and household welfare.