Diversification economies and efficiencies in a ‘b

Authors: Sanzidur Rahman Basanta K Barmon Nesar Ahmed

Publish Date: 2010/10/20

Volume: 19, Issue: 4, Pages: 665-682

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Abstract

‘Gher’ farming is a unique system that incorporates the joint operation of three enterprises freshwater prawn fish and HYV rice and is expanding rapidly in the coastal regions of Bangladesh In this paper we evaluate the performance of this unique system in terms of the existence of diversification economies amongst the three integrated enterprises scale economies and technical efficiency using a stochastic input distance function approach on a sample of gher farmers The results reveal evidence of a diversification economy in the rice–carp combination Economies of scale exist in the ‘gher’ farming system The level of technical efficiency is estimated at 68 implying that a substantial 47 100−68/68 of potential output can be recovered by removing inefficiency Significant efficiency gains are made from diversification amongst these enterprises Also the education of farmers and the female labour input significantly improve efficiency whilst larger operation size reduces efficiency The key policy implication is that the diversification of enterprises particularly the rice–carp combination is beneficial and should be promoted Also investment in education and creation of a hired labour market for females would improve technical efficiency

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