Measuring the Technical Efficiency of Paddy-Producing Farmers’ Organizations in the Northern Region of Malaysia: A Stochastic Frontier Analysis Approach

Abstract

This study investigates the technical efficiency of paddy production among 27 Area Farmers’ Organizations (Pertubuhan Peladang Kawasan, PPKs) operating under the Muda Agricultural Development Authority (MADA), Malaysia, using an output-oriented Stochastic Frontier Analysis (SFA) approach. The analysis spans four planting seasons: Season 2 (2020), Season 1 (2021), Season 2 (2021), and Season 1 (2022) and incorporates six input variables: number of farmers, land area, compound fertilizer, urea, NPK, and pesticide cost, with total average paddy yield serving as the output. The Cobb-Douglas functional form with half-normal inefficiency distribution was selected via the Akaike Information Criterion. Pesticide cost had a strong positive effect on output, highlighting the role of pest management. Region III (Pendang) recorded the lowest average efficiency at 86.56%. Among all PPKs, Kubang Sepat achieved the highest average efficiency (98.04%), while Titi Haji Idris recorded the lowest (74%). The estimated gamma value (0.4426; p = 0.0058) indicates that 44.26% of the variation in output is attributable to inefficiency. The results reveal efficiency disparities, the need for targeted policies, and the influence of weather and pests, which limit yield growth despite efficiency gains. This study provides evidence-based recommendations to improve resource use, productivity, and food security in Malaysia’s paddy sector.