Cost Efficiency of Rubber Farmers in the Upper Northern Provinces of Thailand

Abstract

This research aimed to study factors affecting the cost efficiency of rubber farming during the time that natural rubber prices were strongly decreased. The stochastic cost function was theoretically employed to estimate cost efficiency at a household level from the crop years 2012/13 to 2014/15, from the total 525 observations. The empirical results showed that the cost frontier denotes using the main inputs that lack economy of scale and the cost efficiency index indicated that the adaptation of farmers in this situation was at inefficiency level which average index was remarkably low at 0.087. Additionally, the findings implied that farmers demanded assistance to reduce consequences from financial risks.