The study attempted to investigate the role of credit in cotton production by developing a relationship between
credit and technical efficiency. The study also explores the sources of technical inefficiency by farm size groups
by employing the stochastic frontier production function approach. It employed cross-section survey data of 120
farmers collected from District Muzaffar Garh. The results indicated that all three farm size categories have almost
the same level of technical efficiency with slightly higher level of technical efficiency at middle farm size category
followed by small and large farms. However, per acreage cost of production is found to be directly proportion to
farm size implying that lowest cost of production is observed at small farms followed by middle and large farms.
The major contribution of our study is, small farmer should be focused to provide credit facilities with the binding
constraints that the credit should be invested to purchase tractor or to install tub wells because our results clearly
depicts that availability of credit, source of power and location of farm at water course are affecting the technical
efficiency of small farmers in cotton production more rigorously and with higher level of significance compared to
other two farm size categories.
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