Efficiency in Sugarcane Production Under Tank Irrigation Systems in Tamil Nadu, India

Abstract

An attempt was made to study the efficiency of sugarcane production by farmers under the two different sources of water supply viz., tank water with well water and the well water only. The objective was pursued first by estimating a stochastic production frontier (SPF) using a random sample of 246 farmers under tanks with wells situation (Typology I) and 250 farmers under wells only situation (Typology II.) The results indicated that 92 percent and 93 percent of sugarcane farms are technically efficient in Typology I and Typology II, respectively. The allocative efficiency had shown that 76 percent of sugarcane farms in Typology I and 78 percent in Typology II are allocatively efficient whereas 70 percent in Typology I and 75 percent in Typology II are economically efficient in the study area. The percentages of efficiency gap in sugarcane farms in Typology I and Typology II reveals that on average sugarcane farmers in Typology II were relatively more efficient in achieving the highest technical efficiency level in the same situation where as on average sugarcane farmers in Typology I were relatively more efficient in achieving the highest economic efficiency level in the same situation. This may be because of the higher prices of inputs due to local transport cost in the Typology II when compared to Typology I. The most allocatively inefficient farmer had an efficiency gap of 31 per cent in Typology I and 43 per cent in Typology II, if improved from the current level. In Typology II, though the water supply was assured, the cost of inputs was very high when compared to Typology I, had an impact on the allocative efficiency in the Typology II