Author:

Abstract

Many researchers have depicted that most of the up-country vegetable growers have failed to capture technical efficiency due to poor managerial ability of economic resources. It is an undeniable fact that the majority of up-country vegetable farmers are characterized by poor socio-economic status. This paper investigates the resource use characteristics, profitability and technical efficiency of vegetable farming in a sample of vegetable farmers selected from 12 Grama Niladhary divisions in Nuwaraeliya District. The experiment sites were randomly selected based on a list of the Grama Niladhary divisions in Nuwaraeliya secretariat division and the empirical study was carried out based on a sample of 243 small scale vegetable farmers. This paper uses both parametric and non-parametric approaches to estimate technical efficiencies of vegetable farming at production and marketing stages under rain-fed condition in the up-country of Sri Lanka. The parametric approach was adopted under stochastic frontier production function with Cobb-Douglas form. The non-parametric approach in this paper was based on the data envelopment analysis technique in order to estimate technical efficiency of vegetable farming. Both parametric and non-parametric approaches have shown that the average technical efficiency estimates were not at potential level, and there is ample room for increased productivity through improving technical efficiency of vegetable farming. Under parametric approach, the average technical efficiency estimates at production stage and marketing stage were, 74.62% and 67.04%. Under non-parametric approach, the average technical efficiency was 70.86% and 62.84% at production and marketing stages, respectively. To examine consistency of the estimates from two approaches under different specifications, researcher applied independent sample t test, and the results show that the parametric and non-parametric approaches provide different estimates due to measurement and specification errors.

Keywords: Parametric and non-parametric approach, Profitability, Technical efficiency, Vegetable farming