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Abstract
The paper jointly evaluates the determinants of switching to modern rice and its productivity
while allowing for production inefficiency at the level of individual producers.
Model diagnostics reveal that serious selection bias exists, justifying the use of a
sample selection framework in stochastic frontier models. Results revealed that modern
variety selection decisions are influenced positively by the availability of irrigation
and gross return from rice and negatively by a rise in the relative wage of labour.
Adoption of modern rice is higher in underdeveloped regions. Seasonality and geography/
location does matter in adoption decisions. Stochastic production frontier results
reveal that land, labour and irrigation are the significant determinants of modern rice
productivity. Decreasing returns to scale prevail in modern rice production. The mean
level of technical efficiency (MTE) is estimated at 0.82. Results also demonstrate that
the conventional stochastic frontier model significantly overestimates inefficiency by
three points (MTE = 0.79). Policy implications include measures to increase access to
irrigation, tenurial reform and keeping rice prices high to boost farm returns and offset
the impact of a rise in the labour wage which will synergistically increase the adoption
of modern rice as well as farm productivity.