SHANMUGAN T. R., PALANICHAMY N. V., MAHESH
N.
Abstract
Agro forestry economic efficiency includes both technical and allocative efficiencies
of tree production. Agro forestry technical efficiency refers to the proper
choice of production function among all those actively in use by the agro forestry
farms. Allocative efficiency or price efficiency refers to the proper choice
of input combinations in agro forestry farms. The present paper describes a
model to measure the economic efficiency in agro forestry farms in the State
of Tamil Nadu in India. In Tamil Nadu, agro forestry productivity has been stagnating
in recent years due to technical and allocative inefficiencies. The present
paper discusses a methodological approach applying frontier production function
to measure both allocative and technical efficiency simultaneously. The technical
inefficiency indicated that there existed a 20 per cent potential for raising
agro forestry yield at the existing levels of resources and technology. This
highlighted the need for strengthening the farm extension services to narrow
the gap between "progressive" and "average" farmers. Allocative
inefficiency -was highest in other capital expenses because of not adopting
the principle of the economic threshold level in applying pesticides and this
increased the allocative inefficiency of other capital expenses considerably.
Allocative inefficiency -was the lowest for fertilizer and this might be due
to the fertilizer response of tree crops grown in the region. Economic efficiency
implied that there was scope to raise output by 44 per cent if the production
gaps between "progressive" farms and " average" farms were
narrowed, and through optimal allocation of all resources.
Key Words:
agro-forestry, economic efficiency, technical efficiency, allocative efficiency,
frontier production function