Measurement of Allocative Efficiency of Sugarcane Farms in District Charsadda-Khyber Pakhtunkhwa

According to agricultural trade experts Pakistan need to reduce cost of production in order tocompete in the international market. At national level food group exports decline from 3,439.4 million US$during 2015 to 3040.7 in 2016. Increase in productivity and efficiency has been the major concern for agriculturalresearchers and policy makers in Pakistan. In current study allocative efficiency of sugarcane growers indistrict Charsadda was worked out with frontier model. Randomly 118 sugarcane growers were interviewedduring crop season 2014-2015. For survey data a pre-tested structured questioner set according to objectivesof the study was used. Coefficients of parameters were calculated by maximum likelihood estimationtechniques. Per acre total yield, land rent and per acre inputs cost (labor hired, seed, tractor hours, irrigation,Urea, DAP, FYM and pesticides) were considered determinants for cost function. Respondent age, farmingexperience, education, family size, off-farm income, farm to home distance, tenancy and extension contacts aredeterminants in allocative inefficiency model. Results of the study revealed that except farmyard manure andpesticides all other explanatory variables are significant influencing factors in total cost of sugarcane productionin district Charsadda. In socio-economic characteristics family size and extension contacts show negativecorrelation with allocative inefficiency. Mean allocative efficiency was found 63% with range from minimum36% to maximum 90%. The presence of allocative inefficiency indicates that the average growers can reducehis cost of production (Rs.77,083/- per acre) up to 30% without any decrease in output level. Attractive outputprices, timely payment and provision of quality extension services would help farmers to redirect theirscarce resource allocation and reduce allocative inefficiency.