Exploring the seasonal yield variability, production risk and efficiency: the case of rice farms in Bangladesh

Farmers in developing countries face different rice production risks, influencing yield variability. This study investigates the technical efficiency (TE) and production risk of Boro and Aman rice in Bangladesh. A stochastic production frontier has been used assuming a true random effect (TRE) model with flexible risk properties using two-year seasonal plot-level panel data of 5088 observations for Boro rice and 5638 observation for Aman rice. The empirical result of the risk model shows that labor, fertilizer, seed, and farm capital have a significant risk-decreasing effect for Boro rice. In contrast, the cultivated area of rice and average mean temperature have a significant risk-increasing effect on Boro rice. Labor and pesticide have significant risk-decreasing effects, whereas cultivated area, fertilizer and seed has a significant risk-increasing effect on Aman rice production. The average TE was 76% and 72% for Boro and Aman rice, respectively. Results suggest a high degree of variability in TE estimates, and the average farmer could increase rice yield by 24% and 28% by improving technical management without increasing the existing inputs. Large farms are more technically efficient than other farm categories. It is also observed that small farms and medium farms significantly decrease technical efficiency for Boro rice while significantly increasing for Aman rice. Moreover, technical efficiency declined over time for Boro rice, while it improved for Aman rice in Bangladesh. Production risk, however, declined over time for both Boro and Aman rice.