Determinants Of Cost Efficiency Among Sugarcane Farmers: A Stochastic Frontier Cost Function Approach

The stochastic Frontier cost model was used to analyze the cost efficiency of Sugarcane farm households of Odisha. The primary data were collected from the 200 sugarcane farm households. The joint estimation of parameters of cost function and inefficiency model through one step maximum likelihood method showed that the 97% of the inefficiency were explained due to cost inefficiency and cost efficiency could be increased by 36% through better use of available farm resources. Since college education, average education of the family and experience significantly reduced cost efficiency, this could be achieved through farm specific inputs which include improved education of the effective farm household, better experience, improved education of the family and participation of more educated youth in farming practices. In addition to this, policy should be made for encouraging farm practices in higher education system so that formal education system can link agricultural system of the economy.