ECONOMIC EFFICIENCY OF SOYBEANS PRODUCTION IN THE NORTHERN REGION OF GHANA

Abstract

Soybean is an important cash crop with the potential of reducing poverty in the Northern Region of Ghana. Knowledge on the level of economic efficiency and the factors that influence such efficiency is a good beginning for addressing its sustainability problems. The study aimed at analysing economic efficiency of soybean production in the Northern Region of Ghana. Crosssectional data was collected from 500 soybean farmers across five districts in the region during the 2015 cropping season. The analysis was done using translog stochastic production and cost frontier models in which technical and economic inefficiency effects were specified to be a function of farm and farm-specific factors and estimated in a one-step procedure using maximum likelihood method. Results show that soybean production in the region is characterized by increasing returns to scale. Furthermore, soybean farmers in the region are 82.7% technically efficient, 49.5% economically efficient and 59.5% allocatively efficient. These results show great scope for improving efficiencies and sustainability of soybean production in the Northern Region. The study also showed that being a relatively young farmer, access to extension services and adoption of improved seed variety reduce technical and economic inefficiency among farmers. Increase in years of schooling was found to only significantly increase technical efficiency. Reduced cost of travel from farmers’ residence to their homes and practicing of monocropping significantly increased economic efficiency. Inadequate capital was found to be the most pressing constraint, as most of the farmers did not have access to credit during that cropping season. For a more efficient and sustainable production of soybean, policies that would improve access to improved soybean varieties, credit, smart subsidies and extension services, among others, should be pursued