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Fertilizer use efficiency of rice farms in Sri Lanka: a slack-based dea analysis
(12th International conference of DEA, 2014) Thibbotuwawa, Manoj; Mugera, Amin W.
Subsidizing fertilizer has been one of the most controversial policy debates in developing country agriculture, especially in Asia. This study investigates the levels and factors affecting fertilizer use efficiency and its budgetary implications in Sri Lanka. Based on a cross-sectional data set for the years 2007 to 2010, we use a two-stage approach to examine the efficiency of fertilizer use for paddy production. The first stage uses the slack-based Data Envelopment Analysis (DEA) model to estimate fertilizer use efficiency. Fertiliser use shows relatively lower inefficiency and dominant efficiency distribution compared to the other inputs. We find that, on average, that fertilizer use can be reduced by 13 percent without comprising yield levels. We also find a positive and significant relationship between fertilizer use efficiency and small farms, rain fed farms and quality seed. The study highlights the importance of estimating individual input use efficiencies besides the traditional technical efficiency especially under market imperfections. Our results have budgetary implications related to the subsidy scheme.