Economic Efficiency of Rice Farming: A Stochastic Frontier Analysis Approach
A Stochastic Frontier Analysis Approach
Abstract
The future of agriculture is dependent on increase in the use of resources at disposal, it is therefore imperative that strategies to increase agricultural growth should be directed towards increasing efficiency of smallholder farming operations and resource utilization. This study examined the economic efficiency of rice production. Multistage sampling procedure was used to select 240 rice farmers with the aid of a structured questionnaire. Data collected were analyzed with descriptive techniques, Stochastic Frontier Analysis (SFA) and Tobit regression model. The SFA result revealed that input variables such as seed, herbicide and pesticide were positive and had significant effect on rice output. The rice farmers were able to maximize their output by 74% at lowest minimum cost possible. Furthermore, economic efficiency was positively influenced by age, level of education, membership of farmers association, access to public market and access to health facilities while household size, farming experience, bad road condition and distance to nearest market had negative effects. The study concluded that rice farmers were inefficient. Therefore, in order to raise rice production efficiency and improve the livelihood of smallholder farmers, farmers should attend formal and informal education as it is a key policy issue in the study area, farmers should strengthen the existing association structures and organize new farmer’s associations. Also, the local and regional governments were encouraged to provide good road networks, and public market that will enable farmers dispose their produce at attractive places and prices of their choice.
Keywords
Economics efficiency; Return to scale
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