AN ANALYSIS OF TECHNICAL EFFICIENCY AND PROFITABILITY OF GROWING POTATO, CARROT, RADISH AND BITTER GOURD: A CASE STUDY OF PAKISTAN PUNJAB

Vegetable production could be increased through horizontal expansion, development of modern technology and vertical expansion such as efficient use of readily available resources. Third approach of using available resources more efficiently is more viable since, there is no need to make extra efforts to bring new area under vegetable cultivation and or changing cropping pattern. Similarly, new investment is not needed to develop modern technology. This implies that vegetable production could be increased through boosting up productivity. This will not only increase availability of vegetables in the country but it will also pick up income of vegetable growing farmers. Keeping in view the importance of vegetables in terms of income and essential nutrients, the present study was designed to determine technical efficiency and profitability of growing vegetables in Punjab. Four vegetables namely potato, carrot, radish and bitter gourd were chosen. Stochastic frontier production function was employed to ascertain level of technical efficiency and its determinants. Stochastic frontier production function and ordinary least square (OLS) estimates were used to determine yield level of vegetable production. On the basis of these estimates, profitability of vegetables was estimated. Results of the study showed that OLS was not appropriate method for the given data-sets of vegetables. Moreover, translog production function was preferable over Cobb-Douglas production function on the basis of log likelihood ratio test. Derived production elasticity estimates indicated that seed, plant protection measures, irrigation, labour used to perform various farming activities and use of NPK nutrients were significantly contributing in vegetable yields with few exceptions. It was also found out that irrigation in radish and NPK nutrients in potato production were negatively influencing the yield of respective vegetables. The reasons lie in the fact that the radish growing farmers were using sewage water to irrigate radish crop during shortage of canal water and the use of sewage water badly distressed radish yield, whereas in case of potato production, farmers were using NPK nutrients above the recommended level. Considering determinants of technical efficiency, it was found out that with an increase in age of the vegetable growers, level of technical efficiency declined except in potato production where it was positively related to respondents' age. Education was positively related to technical efficiency implying that the highly educated vegetable growers were using available resources more efficiently. Family size was negatively related to level of technical efficiency in cultivation of all vegetables except bitter gourd. Ownership status had a mixture of effect on the level of technical efficiency. One of the important findings of the study was impact of farm area on technical efficiency. This variable indicated that with increased farm area, technical efficiency declined due to the fact that vegetable growers were able to apply latest technology on the farms because of availability of financial resources. Access to extension services were found declining level of technical inefficiency in vegetable cultivation. Environmental detrimental variables namely fertilizer and plant protection measures were positively related to level of technical efficiency indirectly indicating that vegetable yield had increased at the expense of environmental degradation. Therefore, research is required to determine optimum level of these inputs in vegetable production and other crops. Mean level of technical efficiency was 82 percent in radish, 72 percent in carrot, 70 percent in potato and 66 percent in bitter gourd indicating that there existed potential to increase vegetable production by using existing resources more efficiently. The most profitable vegetable was found bitter gourd followed by carrot, potato and radish. The lowest cost per kg was estimated in carrot cultivation whereas the highest one was found out in bitter gourd production. Coefficient of variation (CV) was determined for net income per acre. Results showed that the minimum value of CV was found out in carrot production and the maximum was recorded in potato production showing that potato production is more risky compared to other vegetables.