Profit efficiency in rice production in brunei darussalam: A stochastic frontier approach

Self sufficiency in rice production has been the main issue in Brunei agriculture. However, rice yield per hectare is only about 1.7 ton per hectare, significantly low compared to other rice producing countries. The best option and the most effective way to improve rice productivity is through more efficient utilization of scarce resources. This paper attempts to study the production efficiency among rice farmers in Brunei using a stochastic profit frontier and inefficiency effects model, analysed from its three components - technical, allocative and scale efficiencies. Empirical result shows that mean profit efficiency score is 80.7 percent and 19.3 percent of profit is lost due to a combination of technical, allocative and scale inefficiencies with average profit-loss of B$987.50. Factors that are related to profit-loss and profit inefficiency are non-membership of cooperative, no irrigation, lack of training and low yield variety.