FARM-SPECIFIC TECHNICAL EFFICIENCY, RESOURCE USE AND EMPLOYMENT: AN ANALYSIS OF SMALLHOLDER RICE FARMERS IN THE UPPER EAST REGION OF GHANA

Abstract

One way of achieving sustained increase in food production in developing countries is to ensure efficient utilisation of scarce agricultural resources. The present study examined farm-specific technical and allocative efficiency of smallholder rice farmers and their impact on employment in the Upper East Region of Ghana over the 2002/2003 cropping year. Another objective was to analyse smallholders' coping mechanisms to production risks. Data were collected from a random sample of 440 smallholder rice farmers (220 irrigators and 220 non-irrigators), which comprised of 306 male farmers and 134 female rice farmers. Farm-specific technical efficiency and allocative efficiency were calculated using a transcendental logarithmic (translog) stochastic production frontier function and estimated by the maximum likelihood estimation method. Allocative efficiency of farms was also computed using the ratios of marginal value products to marginal costs of variable inputs derived from the respective output elasticities. Participatory rural appraisal techniques were employed for qualitative analyses of socio-demographic characteristics and farmers' coping strategies for production risks. The results showed that smallholder rice farmers are technically inefficient because they produce, on average, at 34% below maximum output. Mean technical efficiency is higher for irrigators (48%) than for non-irrigators (45%) whereas technical efficiency is higher for male (58%) than that of female (34%) farmers. Credit availability, family size and off-farm work significantly determine technical efficiency of smallholders. Smallholder rice farmers are allocatively inefficient in input use. Employment and labour productivity levels differ across farm groups. Non-irrigators create more job opportunities in the study area than did irrigators whereas gender was found to have no effect on labour employment. Labour productivity is high for irrigators compared with non-irrigators and is similar for male and female farms. About 25% of the variation in rice output is due to factors beyond the control of the farmers suggesting the seriousness of rice production risks in the region. A programme to accelerate provision of education is needed in order to improve technical and allocative efficiency of rice farmers. Secondly, employment-related policies should not be biased towards irrigators and male farmers because non-irrigators and female-headed farms are equally important in creating job opportunities. Lastly, the maintenance of existing irrigation projects and the provision of community-managed smallholder irrigation projects and rural infrastructure should be emphasized by policy makers.