Technical Efficiency Of Paddy Farming Under Major Irrigation Conditions In The Dry-Zone Of Sri Lanka: A Parametric Approach

Transcription

1 Australan Journal of Basc and Appled Scences, 7(6): 04-, 03 ISSN Techncal Effcency Of Paddy Farmng Under Major Irrgaton Condtons In The Dry-Zone Of Sr Lanka: A Parametrc Approach Aruna Shantha, A, Asan Al, B.G.H and 3 Bandara, R.A.G School of Economcs, Collage of Busness, Northern Unversty of Malaysa, Sntok, Kedah, Malaysa School of Economcs, Collage of Busness, Northern Unversty of Malaysa, Sntok, Kedah, Malaysa 3 Department of Accountancy & Fnance, Faculty of Management Studes, Sabaragamuwa Unversty of Sr Lanka, Belhuloya, Sr Lanka. Abstract: Avalable lterature suggests that paddy farmers n the developng countres fal to explot the full potental of a technology and make allocatve errors. Thus, ncreasng the effcency n paddy producton assumes greater sgnfcance n attanng potental output at the farm level. However t s an undenable fact that the majorty of dry zone paddy farmers are characterzed by poor economc status due to neffcent utlzaton of avalable resources. Ths paper nvestgates the techncal effcency of rce farmng n a major rrgaton schemes n Sr Lanka and to suggest some polcy recommendaton for mprovng the effcency of resource use n paddy ndustry under major rrgaton condtons. The experment ste was a Nagadeepa reservor n Mahyanganaya. The emprcal study was carred based on a sample of 357 paddy farmers under Nagadeepa reservor. In ths study, the techncal effcency of paddy farmers was estmated by usng stochastc fronter producton functon, ncorporatng techncal effcency effect model. The Traslog producton functon was found to be an adequate representaton of the data. Accordng to the results obtaned from the stochastc fronter estmaton, the average techncal effcency of selected farmers gven by the Traslog model s 7.80 per cent. Ths ndcates that there s scope of farther ncreasng the output by 7. percent wthout ncreasng the level of nput. Key words: Paddy Farmng, Irrgaton, Techncal and Manageral Effcency, Fronter Producton Functon. INTRODUCTION Irrgaton s the backbone n Sr Lankan rural economy. Because, 5% of cultvable land and two mllon farmer famles (65% of rural households) are engagng n paddy farmng as ther man occupaton. Hghly water-ntensve rce cultvaton consumes more than 70 percent of the total water allocated for food producton n the country (Henegedara, 00). Accordng to polcy makers rrgaton s one of the most mportant strategc factors n the development of rural sector and t s playng a central a role n poverty allevaton (Hussan & Hanjra, 004). Hence, economcally effcent way of water utlzaton has become a major challenge n rrgaton durng last decades. Sr Lankan rrgaton schemes are dvded nto major, medum and mnor on the bass of land extent (command area) by these schemes (Thruchelvan, 009, 9- June). Major rrgaton schemes are defned those as that have a command area of more than,000 ha, whle systems between 80 and,000 ha are consdered to be medum rrgaton schemes. Mnor rrgaton schemes are those wth a command area of 80ha or less. The prncple rrgated crop, paddy s grown on nearly 730,000 ha of land, and 389,000 ha of ths total s grown under major rrgaton schemes and 70,000 ha of ths total grown under medum and mnor rrgaton schemes (Department of Agrculture n Sr Lanka, 0). Remanng 7,000 ha, whch s non-rrgable paddy land sown by small scale paddy farmers under ran fed.. Lterature revew and Conceptualzaton: In vew of the growng competton n world rce market and hgh producton costs, producton effcency wll become an mportant determnant of the future paddy ndustry n Sr Lanka. Developng and adoptng new producton technologes could mprove producton effcency. In addton the ndustry could mantan ts economc vablty by mprovng the effcency of exstng operaton wth a gven technology. In other words, the ndustry s total output can be ncreased wthout ncreasng the total cost by makng better use of avalable nputs and technology. Avalable lterature suggests that farmers n developng countres fal to explot the full potental of technology and make allocatve errors (Taylor and Shonkwler, 986; Al and Flnn, 989; Kalrajan and Shand, Correspondng Author: A. Aruna Shantha, PhD Canddate, School of Economcs, Collage of Busness, Northern Unversty of Malaysa, Sntok, Kedah, Malaysa. E-mal: arunaeconomcs@yahoo.com 04

2 989; Bravo-Ureta and Evenson, 994; Shanmugan and Palansam, 994; Sharma and Datta, 997; Thomas and Sudaresan, 000, IWMI, 00; and IPRI, 00). Most researches and studes have been dscussng the techncal neffcency of rrgated paddy farmng around the world. However, n Sr Lanka very lttle emprcal efforts have been made to measure the techncal effcency and has assessed the focal factors on ths techncal effcency n rrgated paddy farmng. Effcency of a producton unt s defned as how effectvely used avalable resources for the purpose of proft maxmzaton at gven technology, avalable fxed factor and factor prces (Sadoulet & Janvy, 995). In 957 M.J Farrell defned effcency wth three conventonal economc concepts such as: techncal effcency, allocatve effcency and economc effcency. Accordng to Farrell (957) Techncal effcency s defned as the ablty to archve a hgher level of output gven smlar level of nputs. Allocatve effcency deals wth the extent to whch farmers make effcent decsons by usng nputs up to the level of whch ther margnal contrbuton to producton value s equal to the factor costs and techncal and allocatve effcences are component of economc effcency Ths defnton s consdered as tradtonal radal effcency measures by recent lterature (Brec, Cavagnac, & Kerstens, 00). Ths radal nput effcency measure s the nverse of the nput dstance functon that tself s dual to cost functon (Shephard, 970). Techncal effcency on an ndvdual decson makng unt s defned n terms of the rato of the observed output to the correspondng fronter output, condtoned on the level of nputs used by the frm (Russel, 985). A frm s sad to be techncally effcent f a frm s producng the maxmum output from a mnmum quantty of nputs (Zechang, 984). Techncal effcency s a necessary condton for allocatve effcency and allocatve effcency s a necessary condton for optmal allocaton of resources. Generally, techncal effcency s defned as the rato of the observed output to the correspondng fronter output, condtonal on the levels of nputs used by that frm.. Background of the Problem: About one-thrd of the world s food supply s produced on 50 mllon hectares of rrgated land or less than one-ffth of the total cultvated area (Stewart & Nelsen, 990). In developng countres, where two-thrds of farmers depend on rrgaton and 50% of addtonal output durng the last four decades produced by rrgated land (Barrow, 99). However, over the past decades publc nvestment n major, medum and mnor rrgaton systems has not yelded the expected results and the soluton to the growng water crss les n the nsttutonal reform of exstng socal system so as to manage the demand for water (Thruchelvan, 009, 9- June). Although rrgaton has enhanced agrcultural producton, most large scale systems have not generated the result expected by project planners, causng a declne n publc fundng for rrgaton projects n recent year (Plusquellec, McPhal, & Polt, 990). Poor performance has been caused by the falure of publc agences to collect funds from farmers to support operaton and mantenance of large-scale rrgaton schemes n developng countres (Johnson, 990) It s generally beleved that resources n rce farmng, especally n under-developed countres are beng utlzed neffcently (Baten, Abdulbasah, & Fatama, 009). Most rrgated paddy farmers n the dry zone are below the fronter level and they cannot gan the economes of scale due to solaton operaton of those frms and nadequate sklls and assests. However, very lttle lterature has focused the techncal effcency of ths ndustry and ts determnants. The absence of quanttatve research on techncal effcency on rce farmng s one of the man problems for polcy makers n decson makng. Consequently, t seems that there s a gap n the theoretcal knowledge and quanttatve measurements of techncal effcency of rce ndustry n Sr Lanka. Therefore, the problem addressed n ths study s to measure techncal effcency and dentfy the man factors behnd the techncal effcency of rce farmng n Sr Lanka..3 Objectves of the Study: The man objectve of ths study s to measure the techncal effcency of rce farmng under major rrgaton condtons and to dentfy soco-economc and management practces that nfluence rrgated rce farmng n Sr Lanka. The specfc objectves are; (a) To dentfy the more approprate functonal form for fronter analyss and (b) to dentfy the most sutable dstrbutonal functon for neffcency term. MATERIALS AND METHODS. Study Locatons: The Nagdeepa rrgaton scheme was selected for the study based on the degree of water rsk n the dry season (Yala Season). Ths scheme s located around 3 km from Mahyanganaya Town shp on the Bble road, n Budulla Dstrct. It was set up n 969 by Irrgaton Department wth,000 farmer famles and approxmately,765 ha. of rrgable land. At present about,400 famles are lvng n the area whle authorzed farmer famles were around,440. The dstrbuton network conssts of.6 km of man channel, 30.6km of dstrbutary channels and 9km of feld channels. There are 4 dstrbutares and 303 feld channels n the 05

3 system. Each farmer was gven. ha. of rrgable extent and 0.4 ha. of hgh land when they have settled n the project. In wet season (Maha Season) around 300 ha. of rrgable land were cultvated. However, durng dry season (Yala Season) the rrgable land was uncultvated due to shortage of water.. Samplng Framework: The target groups of the feld survey were authorzed paddy farmers n selected schemes. Ther ncome manly depend on agrculture and related actvtes, especally paddy farmng. Thus, total sample populaton was,440 settler households n Nagadeepa rrgaton scheme. Stratfed random sample technques were used to select the sample under two stages. At the frst stage farmers were clustered as head, mddle and tal based proxmty of water sources to the rrgable land. Because, n practce, farmers whose felds are furthest from the water sources frequently have least secure water supply, whle the farmers whose felds are closer to water source receve an unduly large share of channel water. The rrgaton engneers and techncal offcers were nvolved n the development of head, mddle and tal regons of each scheme. In the second stage sample sze was determned under the Morgan (00) approach. Table : Populaton and Sample Framework Scheme Clusters No of Households *Sample Sze α=0.05,t=.96 Nagadeepa Total Head Mddle Tal.3 Model specfcaton : The orgnal specfcaton nvolved a producton functon specfed for cross-sectonal data whch had an error term composed nto two components: a stochastc random error component and a techncal neffcency component (Lovell, 993). The model expressed n the followng form: Y f X I =,, N. Where Y s the producton (or the logarthm of the producton) of the -th frm; X = Kx vector of nput quanttes of the -th frm; = vector of unknown parameters; the essental dea behnd the stochastc fronter model s that term can be wrtten as V = the random varable whch s assumed to be ndependently and dentcally dstrbuted and ndependent of U (Lovell, 993). Further, t s two sded (-α < V < α) normally dstrbuted and random error that captures the stochastc effects outsde the farmers control (Lovell, 006). (E.g. weather, natural dsaster and lucks). U s non-negatve random varables whch are assumed to account for techncal neffcency n producton and are often assumed to be ndependently and dentcally dstrbuted and truncatons (at zero) of the normal dstrbuton or half-normal (Kumbhakar, Soumandra, & Thomas, 99). U s a one sded ( U 0) effcency component that captures the techncal effcency of farmers. It Y f X V ,440 measures the shortfall n output Y from ts maxmum value gven by the stochastc fronter.4 Emprcal model: In prevous lterature, dfferent types of producton functons have been adopted to dscuss the fronter analyss. Among emprcal lterature, the most commonly appled producton functon s Cobb-Douglas (CD) producton functon and the transcendental Logarthm (TL) producton functons (Baten et al., 009, Battese & Corra, 977, Hassan & Ahmad, 005, Kachroo, Sharma, & Kachroo, 00). The parameters of neffcency model were produced wth two-step approach. Fnally Cob-Douglas and translog producton functons can be wrtten wth natural logarthms as follows: 6 The emprcal model for Cobb-Douglas functon forms s gven by; InY 0 jinx j V U, The emprcal model for translog functonal form s gven by; InY 0. InX j. InX jinx j jinx jinx j Vj Uj j j Where ln denotes logarthms to base e and Y = Output (Kg/ha),X = Extent of land (ha.),x = Famly labour (man days),x 3 = Hred labour ( days/ha) X 4 = Quantty of Fertlzer (NPK) (kg/ha).,x 5 = Cost of machnery (Rs/ha),X 6 = Off farm ncome (Rs./month/household) and β 0,β.. β 7 are parameters to be estmated and j

4 V = Random error, U = Techncal neffcency term (half-normal for Cobb-Douglas and truncate normal for translog producton functon). Varables for Ineffcency Model = Experences n rce farmng (years), = Educaton (Years), 3 = farmer Tranngs (Dummy, =Yes, 0= No), 4 = Proxmty to water source(s) (Dummy; =Headend, 0= Otherwse), 5 = Water management practces (Dummy; = good, 0=Otherwse), 6 = Usage of New Equpment (= Yes, 0 = No), 7 = Contact wth Government Supportve Agences (Dummy; = good, 0= Otherwse), 8 = Respect to Common schedule (Dummy; Good=, Otherwse= 0) The stochastc fronter model was estmated usng the FRONTIER 4. and the parameters of neffcency model were estmated wth TOBIT regresson wth the help of LIMDEP software packages..5 Output Input Elastctes: However, snce frst-order coeffcents of traslog producton functons are not very nformatve unlke Cobb-Douglas coeffcents, t cannot be used drectly for as output elastcty of respectve factor. Awudu and Eberln (00) have appled partal dervatve process wth the support of estmated coeffcents n producton functon to measure nput-output elastcty. In the study, researcher appled Awudu and Eberln methods whch have been establshed as follows; LnOutput X X X X X X X X X X X X 3XX 4XX3 5XX4 6 XX5 7 XX6 8 XX3 9XX4 0XX5 XX6 X3X4 3XX 3 5 4XX 3 6 5XX 4 5 6XX XX Elastcty for * Output X Output X X X X X X X X Output Output The slope s calculated as follows: ( )* X X The equaton below show the calculaton of elastctes evaluated at the mean yeld X ( ), thus: X Yeld Ex ( ). Smlar approach s appled for measurng nput elastctes of other nputs such as: famly labour, hred labour, fertlzer, machnery and access to water ndex. Followng table shows the results of the nput elastctes for each nput n the traslog stochastc fronter producton functon Hypothess Testng: Lkelhood rato test (LRTs) have been used to compare two nested models. Asymptotcally the test statstcs s dstrbuted as a ch-squared random varable wth degree of freedom equal to the dfference n the number of parameters between the models. Null hypotheses of nterest are tested usng the generalzed lkelhood rato. The generalzed lkelhood-rato statstc λ gven by: InLH ( 0)/ LH ( ) InLH ( 0) InLH ( ) Where LH ( 0) s the value of the lkelhood functon for the fronter model, n whch parameters restrctons specfed by the null hypotheses, H 0 s mposed; and L (H ) s the value of the lkelhood functon for the general fronter model. If the null hypotheses s true, then λ has approxmately a ch-square (or mxed square) dstrbuton wth degree of freedom equal to the dfferences between the parameter estmated under H 0 and H RESULTS AND DISCUSSION 3. Descrptve Statstcs: Table- shows the descrptve statstcs of some mportant varables n paddy farmng among selected farmers n Nagadeepa reservor. Average proft ncludng mputed cost per hectare obtaned by paddy farmer was Rs.0, 653 per hectare wth varablty ndex of 8.9 percent. 07

5 Table : Descrptve analyss of the paddy cultvaton of selected tanks Varables Mean Std. Devaton Paddy yeld (Kg/ha) Extent Cultvated (ha) Fertlzer Cost (Rs/ha) Famly Labour (Man days/ha) Hred Labour (Man days /ha) Chemcal Cost (Rs/ha) Machnery Cost (Rs/ha) Other cost (Rs/ha) Total Cost of Producton(Rs/ha) * Total Cost of Producton (Rs/ha) * Gross Income (Rs/ha) Proft (Rs/ha) * Proft (Rs/ha) * * excludng mputed cost, * ncludng mputed cost, $= 6 SLRS , ,545 6,43 67,69. 88,0. 08,856 4,6.9 0, , Whle wthout mputed cost the proft per hectare was Rs. 4,6 wth.7percent varablty ndex. Average yeld per hectare was kg wth varablty ndex of 4.7 percent. A drastc yeld dfference between head farmers and tal farmers were observed and t was manly due to rrgaton nequalty. The hghest yeld (6987 kg/ha) was reported by a head- end farmer and lowest (887kg/ha) was reported by a tal-end farmer. A famly labour accounts for large porton of labour cost n a selected tank and t was ranged from -46 man days n selected tanks. It was revealed that, yet, famly members were jontly engagng n paddy farmng although they were recevng slmmer proft margn wth respectve feld. 3. Hypothess Testng: A seres of tests were done to test the specfcaton of functonal form, dstrbutonal pattern of neffcency term and avalablty of techncal effcency n the data set and results are summarzed n table. These were tested through mposng restrctons on the model and usng the generalzed lkelhood rato statstcs. At the frst step researcher hypotheszed that the average Cobb-Douglas functons adequately represents the producton structure of the furnture ndustry. However ths hypothess ( γ = 0, ) was strongly rejected at 0.05 sgnfcant level. By second hypothess researcher attempted to dentfy the best stochastc fronter among Cobb-Douglas and Traslog functons. Accordng to LR test, fronter traslog functon was recommended as best functon to represent data set by rejectng null hypothess at 95% probablty. Fnally the study tests the dstrbutonal pattern of techncal neffcent term U by mposng the restrcton of µ = 0, ndcatng that the neffcent term s half-normal dstrbuton. Whle, null hypothess rejected at 5% sgnfcant level and proposed truncated normal dstrbuton for neffcent term. Observng that entre hypothess ths study has selected traslog producton stochastc fronter producton functon wth truncated normal dstrbuton for neffcency term. Table 3: Log lkelhood Rato Test Null Hypothess Log lkelhood LR Statstcs Crtcal Value Decson H 0 : γ = 0, Average CD = Fronter CD ** (0.05) Reject H 0 H 0 : Fronter CD = Fronter TL (0.05) Reject H 0 H 0 : (0.00) Reject H 0 Note: **The crtcal values are taken from table of Kodde and Palm (986). The null hypothess whch ncludes the restrcton that γ s zero does not have a ch-square dstrbuton, and snce the alternatve hypothess s that 0<γ> the test has asymptotc dstrbuton. 3.3 Stochastc Fronter Producton Functons: The estmated parameters of the traslog producton fronter and Cobb-Douglas are presented n table 3. However, snce the study used only traslog coeffcents for further analyss snce Cobb-Douglas were rejected by prevous hypothess testng. The γ s the percentage of the varance of frm specfc techncal neffcency (U ) to the total varance of output. Snce γ s closed to (0.98) suggested that the techncal neffcency s exstng wth rrgated paddy ndustry n Sr Lanka. The value s 0.98 means that the varaton of the output due to techncal neffcency and fronter output s domnated by techncal neffcency. Further λ s rato of the varance of frm-specfc techncal neffcency (U ) to the varance of random error (V ). Besdes, the value for σ s postve ndcate that the observed output devate from fronter output and also average response functons were not rght producton functon for studyng the structure of paddy farmng n Sr Lanka. 3.4 Frst-order Parameters of Stochastc Translog Functon: 08

6 The frst order parameters of traslog stochastc fronter β j have the predcted (postve) sgn reflectng the conventonal drect relatonshp between nputs and output. Unless recurrent expendture, all other varables were strongly sgnfcant at 99% probablty level. The bordered Hessan Matrx of the frst and second order partal dervatves s negatve sem-defnte reflectng that all regularty condtons such as; postve and dmnshng margnal product are vald at the pont of approxmaton (.e., sample mean). 3.5 Input Elastctes: Table 3 shows results of the nput elastctes for each nput n the traslog stochastc producton functon. A one percent ncrease n the famly labour, gross value of output ncrease by 3.44 (t=3.) ceters parbus. Whle, as hred labour ncrease by one percent value of output ncrease only by 0.86 (t=.6) ceters parbus. Among selected varables, hghest response varable to gross output was extent cultvated snce ts nput elastcty s 3.6 (t=3.5). A one percent ncrease n fertlzer appled and expendture on machnery, the value of gross output ncrease by.8 (t=.4) and 0.95 (0.06) respectvely subject to other varables keepng constant. Table 4: Input Elastcty Varables Input Elastcty Extent Cultvated(X) 3.6 Famly Labour Employed (X) 3.44 Hred Labour Employed (X3) Fertlzer appled (X4).8 Expendture on machneres (X5) Off farm ncome (X6) Frequency Dstrbuton of techncal effcency: The results of the frequency dstrbuton of techncal effcency of selected furnture producers are presented n Table 5. The study reveals techncal effcency (TE) of selected frms rangng from 3.7 percent to 99.9 percent, wth an average 0f 69.5 percent. The results suggested that, on average the ndustry output can further ncrease by 30.5 percent wthout ncreasng the level of nput. Besde t ndcates that the average farmer n the sample could save percent (.e., -{69.5/99.97}) of cost and the most techncally neffcent frm can acheve 76.3% cost savng compared wth the TE level of hs most effcent counterpart. In addton, around 4.8 percent frms are reflectng very poor TE and 38% frms are keepng an excellent record n TE (more than 80%). Table 5: Frequency Dstrbuton of Techncal Effcency Range of Techncal Effcency No of Farmers Percentage (%) Below Maxmum TE = 89.97% Mnmum TE = 3.67% Mean TE = 7.80% Source: Author s Computaton. Table 6: Translog and Cobb Douglas Stochastc Fronter Producton Functons Varables Parameters Traslog Cobb-Douglas Coeffcents T-Rato Coeffcents T-Rato Constant Extent cultvated (X) Famly Labour (X) Hred Labour (X3) Quantty of fertlzer (X4) Expendture on Machnery (X5) Off-farm Income (X6) Ln-(X) Ln-(X) Ln-(X3)

7 Ln-(X4) Ln-(X5) Ln-(X6) (X)*(X) (X)*(X3) (X)*(X4) (X)*(X5) (X)*(X6) (X)*(X3) (X)*(X4) (X)*(X5) (X)*(X6) (X3)*(X4) (X3)*(X5) (X3)*(X6) (X4)*(X5) (X4)*(X6) (X5)*(X6) Sgma Square Log Lkelhood Functon Sgma Sgma-Squared (u) u Sgma-Squared (v) v Lamda ( / ) Gamma u v Mu LR test of the one-sded error % Mean Effcency 7.80% - Note:,, Sgnfcant at % and 5% respectvely. 3.7 Factors effectng techncal Effcency: The censored regresson or Tobt model was appled to determne the mpact of soco-economc and manageral capabltes on techncal effcency n furnture ndustry n Sr Lanka. For ths model, TE of each frm consdered as dependent varable and 8 explanatory varables whch were reflectng the manageral capabltes and soco-economc status of producers were selected. The results of the Tobt functon was performed n table 6. All selected varables are postvely assocated wth TE and unless α 7 all other varables were sgnfcant at 0.0 level. Among educaton and Experences, the experence n rce farmng has acqured the bg share of Tobt functon ndcatng that experence can exert more nfluence on TE rather than educaton. Snce all other varables are Dummy varable, researcher measured exponentated value of respectve parameter for better nterpretaton. The exponentated coeffcents are the best means of nterpretng the mpact of the dummy varable (Joseph F, Black, Barry, & Rolph E, 00). The exponentated coeffcent of α 3 s. means that, head-end producers have percent hgher TE score than untraned producers (.-*00). Smlarly, those producers who have appled better water management practces, ther level of TE s 49% more than the producers who haven t such effort. Some producers have appled new technology for ther farmng and such producers reflected % greater techncal effcency of paddy ndustry than the producers who dd not apply such technology. Contact wth supportve agences drectng margnal mpact on TE compare to other varables. 0

8 Producer s atttudes towards government supportve agences dd not reach a satsfactory level and t dd not exert nfluence on TE of rce farmng n Sr Lanka. Fnally, the study found two mportant varables whch have had greater mpact on techncal effcency n rce farmng such as: usage of new equpment and respect a common schedule. The producers, those who have perfectly followed the common cultvaton schedule ganed 65% more beneft on techncal effcency than others. Besdes, any producer who may use new equpment n ths ndustry can enhance ther techncal effcency by 53 percent from current level. Table 7: Ineffcency Model Censored Regresson Varable Parameter Coeffcent T-Rato Exp(α) Experences n Rce Industry (Years) Educaton (Years) Attended Tranng Courses (Yes=, No=0) Proxmty to Water Source (=Head,0=Tal) Water Management Practces(Good=, OW=0) Usage of New Equpment s (Yes=, No=0) Contact wth Supportve Agences (Good=, OW=0) Respect to Common Schedule (good =, OW =0) Log Lkelhood Functon Source: Author s computaton Concluson And Recommendatons: Ths study manly attempted to estmate techncal effcency of rrgated paddy farmers under major rrgaton condtons n Sr Lanka and dentfy ts determnants. The average techncal effcency of ths ndustry was 7.8% or 7.% below the potental. Further t was ndcated that on average, the frm s output can further ncrease by 30.5% or cost can be reduced by 7.% wthout changng exstng nput level and technology. The study also examned the relatonshp between producer s manageral capabltes and soco-economcs attrbutes wth techncal effcency of rrgated paddy farmers under major rrgaton condtons n Sr Lanka. The results revealed that all selected varables had a sgnfcant mpact on techncal effcency except contact wth supportve agences. If producers can use new equpment and better water management practces they would be able to upgrade ther TE more than 50%. Further, by usage of new technologes and followng a common cultvaton schedule may further enhance ther effcency around 50%. Educaton, experences and tranng were also key determnants behnd the techncal effcency n rrgated paddy farmng under major tanks. However, contact wth government supportve agences s only the factor that has found nsgnfcant mpact on TE. Another possble nterpretaton s that polces are not suffcently strong or effectve to helpng n produce more effcently. Although the government has establshed number of supportve agences to support rce ndustry durng last decades, stll they are functonng below the fronter level due to msmanagement of resources and technology. REFERENCES Al, M., & J. Flnn, 989. Proft effcency among basmat rce producers n pakstan's punjab. Indan journal of Agrcultural Economcs, 49(): Barrow, C., 99. Land Degragaton and Breakdown of Terrestrel Envonments. Cambrdge: Cambrde Unversty Press. Baten, M., A. Abdulbasah, & K. Fatama, 009. Techncal Effcency n Stochastc Fronter Producton Model: An Applcaton to the Manufacturng Industry n Bangladesh. Australan Journal of Basc and Appled Scence, 3(): Battese, G., & G. Corra, 977. Estmaton of producton frontor Model: wth Applcaton to the Pastoral Zone of Eastern Austtrala. Journal of agrcultural Economcs, : Bravo-Ureta, B., & A. Pnhero, 993. Effcency Analyss of developng Country Agrculture: A revew of the Frontor Functon lterure. Agrculture and resource Economc Revew, : Brec, W., L. Cavagnac, & K. Kerstens, 00. Drectonal Mesurement of Techncal Effcency of Producton: An Axomatc Approach. Perpgnan: School of management, Unversty Perpgnan. Department of Agrculture n Sr Lanka, 0. Agrculture Technologes. Retreved February 8, 0, from

9 Farrell, M., 957. The mesurement of Productve Effcency. Journal of Royal Statstcal Socety, Seres A, 0: Hassan, S., & B. Ahmad, 005. Stochastc Frontor Producton Functon, Applcaton and hypothess testng. Internatonal Journal of Agrculture and Bology, 7(3): Henegedara, G., 00. Agrcultural Polcy Reform n the Paddy Setor n Sr Lanka: An Overvew. Sr Lanka Journal of Agrculture, 0(): -5. Hussan, I., & M.A. Hanjra, 004. Irrgaton and Poverty Allevaton : Revew of The Emprcal Evdence. Irrgaton and Dranage, 53(): -5. Insttute of Internatonal Rce Research, 00. GAPs fll the Gap. Manla: IIRR. Internatonal Water Management Insttute, 00. Irrgton Sector n Sr Lanka:Recent Investment Trands and the Development Path Ahead. Colombo: Internatonal Water Management Instture (IWMI). Johnson, S., 990. Progres and Problem of rrgaton Investment n South and Southeast Asa. Water Internatonal, 5(): 5-6. Joseph, F.H., W. Black, J. Barry, & E.A. Rolph, 00. Multvarate Data Analyss (Seventh Edton). Pearson Prentce Hall. Kachroo, J., A. Sharma, & D. Kachroo, 00. Techncal Effcency of Dryland and Irrgated Wheat Based on Stochastc Model. Agrcultural Economc Research Revew, 3: Kalrajan, K., & R. Shand, 985. Types of Educaton and Agrcultural Productvty: A qualtatve analyss of Taml Nadu Rce Farmng. Journal of development Studes, : Kumbhakar, S., G. Soumandra, & J. Thomas, 99. A Generalzed Producton Functon Approach to Estmate determnants of Ineffcency n U.S Dary farm. Journal of Busness and Economc statstcs, 9(3): Lovell, C., 993. Producton Frontor and Producton Effcency. Oxford: Oxford Unversty Press. pp: Lovell, C., 006. Producton fronter and producton effcency, n Maryono Joko' geographcal Dstrbuton of techncal effcency n Indonesan Producton Durng the perod of Jumal Ekonom pembangunan, (): Plusquellec, H., K. McPhal, & C. Polt, 990. Revew of Irrgaton System performe wth Respect to Intal Objectves. rrgaton and Dranage System, 4(): Russel, R., 985. Measurement of tehncal Effcency. Journal of Economc Theory, 35(): Sadoulet, E., & D. Janvy, 995. Quanttatve Development Polcy Analyss. Baltmore: John-Hopkng Unversty Press. Shanmugam, T., & and K. Palansam, 994. Mesurement of economc effcency-fronter functon approach. Journal of Indan Socety of Agrcultural statstcs, 45(): Sharma, V., & and K. Datta, 997. Techncal effcency n wheat producton on reclamed alkal sols. Productvty, 38(): 334. Shephard, R., 970. Theory of Cost and Producton Functon. Prnceton: Prnceton unversty Press. Stewart, B., & D. Nelsen, 990. Scope and and Objectve of Monograph, n Denns Wchelns (Eds). Water Resource development, 5(4): Taylor, G., & and J. Shonkwler, 986. Alternatve stochastc specfcaton of the fronter producton functon n the analyss of agrcultural credt programme and techncal effcency. Journal of development Economcs, : Thruchelvan, S., 009. Enhancement of capacty pf Farmer Organzaton for Sustanable IrrgatonSystems n Anuradapura and Kurunegala Dstrcts. Proceedng of the Internatonal Conference on Water, Food Securty and Clmate Change n Sr lanka (pp. 7-5). BMICH- Colombo: Internatonal Water Management Insttute (IWMI). Thomas, K., & and R. Sundaresan, 000. Economc effcency of rce producton n Kerela. The Bhar Journal of Agrcultural Marketng, 8(3): Zechang, K., 984. An extended farrell Effcency Measure. Journal of Economc Theory, 33():