MEASUREMENT OF FARM LEVEL ECONOMIC EFFICIENCY AN APPROACH TO UNIT COST OF PRODUCTION

Abstract

A methodology is developed for measurement of farm level overall productive efficiency in terms of unit cost of production on application of three sigma rule to reduce the gap between theory and practice in this regard. The study analyses unit cost of production to examine resource use patterns and farm efficiency across different size groups of farms in paddy production in West Bengal based on farm level primary and secondary data. It appears that the bottom class (i.e., below 1 acre) is least efficient, whereas top size class (i.e., 4 acre and above) is most efficient. Minimization of unit cost is very important for the farmers for augmentation of their economic efficiency and profitability and for the sake of sustainability of the farming system. There is a scope of reduction of unit cost in West Bengal agriculture and also for the country as a whole.