MEASURING ECONOMIC EFFICIENCY OF SMALL TEA GROWERS OF ASSAM: A DUAL APPROACH USING SFA AND DEA
DOI:
https://doi.org/10.65009/yx8nn105Keywords:
Technical efficiency; Stochastic Frontier Analysis; Data Envelopment Analysis; Small tea growers; Assam; Economic efficiencyAbstract
Small tea growers (STGs) constitute a critical segment of Assam’s tea economy,
accounting for more than half of the state’s total tea production. Despite their growing
contribution, concerns relating to suboptimal productivity, inefficient input use, and weak
cost management underline the need for a systematic assessment of their economic
efficiency. This study examines the efficiency performance of STGs in Assam using a
dual methodological framework that integrates parametric and non-parametric frontier
techniques. Technical efficiency is estimated using Stochastic Frontier Analysis
(SFA) based on a Cobb–Douglas production function, while Data Envelopment
Analysis (DEA) is employed to evaluate technical, allocative, and economic efficiency
under an input-oriented variable returns to scale specification. The analysis is based on
cross-sectional data collected from 379 small tea growers across six major tea-growing
districts of Assam. Results from the SFA indicate that none of the growers operate on the
production frontier, with an average technical efficiency score of approximately 0.79,
suggesting considerable scope for input rationalisation. In contrast, DEA estimates reveal
that a large proportion of growers appear technically efficient; however, allocative and
economic efficiency scores remain substantially lower, reflecting cost inefficiencies and
suboptimal input combinations. The divergence in results highlights fundamental
methodological differences between stochastic and deterministic frontier approaches. The
study concludes by outlining policy measures aimed at improving training, input
management, and institutional support for enhancing the overall economic efficiency of
small tea growers in Assam.
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