Farm Efficiency under Cobb-Douglas Production Technology

Production Technology Introduction IN earlier communications to this journal Dey and Rudra (1973 a, b) presented some results based on farm-level data of Farm Management Survey of West Bengal of a test carried out for the hypothesis of al locative efficiency of fanners under the assumption of Cobb-Douglas technology.' The authors considered the production function connecting value of output (O) with two input variables defined as labour input (L) and material inputs (M) both for crops taken individually and for crops taken together. They studied empirically the relation between the pairs of variables (M L and O) and found that there is a strong association between the pairs of variables for all crops and no association for individual crops. The lack of association between the variables for individual crops with the derived test results prompted them to conclude that the hypothesis of allocative efficiency of farmers gets rejected at least in the case of West Bengal irrespective of any production technology. The aim here is to examine the same allocative efficiency hypothesis in the same region after a period of about 18 years. During this period, some authors argue that a transformation of West Bengal agrarian economy has taken place in terms of its changes in production of major crops. This has been possible partly due to the widespread use of modern agricultural inputs and partly due to the institutional changes that occurred for the implement ation of land reform programme and the establishment of the three-tier panchayat system in the 1980s in rural West Bengal [Saha and Swaminathan 1994]. It will be interesting to examine the efficacy of alio- cative efficiency model under the changing conditions of West Bengal agriculture.