Stochastic Frontier Analysis of Technical Efficiency in Potato Production: Case from Bhaktapur, Nepal

Abstract

This study assessed the technical efficiency of potato production and its determinants in Bhaktapur district, Nepal. Data was collected from 160 potato farmers randomly selected from two municipalities in Bhaktapur district; 80 from each municipality. Technical efficiency was estimated using a stochastic frontier model, while influencing factors were identified through a Tobit model. The study found a mean technical efficiency of 93.5%, ranging from 68.7% to 98.8%, with 43.75% of farmers achieving 95 to 100% efficiency. Potato seed, farmyard manure, chemical fertilizer (di-ammonium phosphate), labor, and hours of mini-tiller used positively influenced potato output (yield) in the stochastic frontier production function. The significant elements of technical efficiency were farming experience, secondary occupations of household members, contact with extension agents, social organization memberships, cultivation area share, and training received for potato production. The results suggest that the existing 6.5% inefficiency can be reduced by improving both socio-economic factors and the use of key production inputs. These findings provide useful evidence for policymakers to design interventions that strengthen extension services, ensure timely access to quality inputs, promote farmer training, and encourage participation in social organizations, which together can enhance productivity and improve the efficiency of potato production in the study area.