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Allocative efficiency analysis of wheat and cotton in district Khanewal, Punjab, Pakistan

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Abstract

To compete in the international market, a farmer in Pakistan needs to decrease its production cost. Agricultural researchers and policymakers are focusing on increasing the productivity and efficiency of growers. The current study is based on the allocative efficiency of wheat and cotton growers in Khanewal, Punjab, by using a stochastic frontier cost model. A sample of 250 wheat and cotton growers is randomly interviewed during the year 2018. Variance inflation factor and Koenker Basset test show that data is free from heteroscedasticity and multicollinearity problems. The estimated coefficient obtained from maximum likelihood estimation techniques shows that all inputs cost used for wheat and cotton are the basic elements of increasing the allocative efficiency of growers. The estimated result of inefficiency factors shows that education, experience, and family size have a significant effect on wheat production. Meanwhile, access to credit, education, experience, and family size has a significant effect on cotton production and pool. The estimated mean efficiency score for wheat, cotton, and pool are 76, 83 and 79%, which suggests that farmers can reduce their cost 26 and 17% to gain the level of maximum efficient growers of wheat and cotton. The study suggested that Seeds cost (wheat) and fertilizer costs (cotton) have the highest coefficient which reduces the efficiency level of wheat and cotton growers, so special attention should be given during using seed and fertilizer to reduce the cost. The study also suggested that farmers need to engage more family members on the farm instead of hired labor.

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Authors and Affiliations

  1. Northeast Forestry University, Harbin, China

    Farah Perveen & Jie Shang

  2. Northeast Agricultural University, Harbin, China

    Muhammad Nasrullah

  3. Xiangtan University, Hunan, China

    Muhammad Rizwanullah

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  1. Farah Perveen
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  2. Jie Shang
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  3. Muhammad Nasrullah
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  4. Muhammad Rizwanullah
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Correspondence to Jie Shang.

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Perveen, F., Shang, J., Nasrullah, M. et al. Allocative efficiency analysis of wheat and cotton in district Khanewal, Punjab, Pakistan. GeoJournal 86, 2777–2786 (2021). https://doi.org/10.1007/s10708-020-10228-x

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