Agricultural microcredit and technical efficiency: The case of smallholder rice farmers in Northern Ghana

In the current study, we compared technical efficiency of smallholder rice farmers with and without credit in northern Ghana using data from a farm household survey. We fitted a stochastic frontier production function to input and output data to measure technical efficiency. We addressed self-selection into credit participation using propensity score matching and found that the mean efficiency did not differ between credit users and non-users. Credit-participating households had an efficiency of 63.0 percent compared to 61.7 percent for non-participants. The results indicate significant inefficiencies in production and thus a high scope for improving farmers’ technical efficiency through better use of available resources at the current level of technology. Apart from labour and capital, all the conventional farm inputs had a significant effect on rice production. The determinants of efficiency included the respondent’s age, sex, educational status, distance to the nearest market, herd ownership, access to irrigation and specialisation in rice production. From a policy perspective, we recommend that the credit should be channelled to farmers who demonstrate the need for it and show the commitment to improve their production through external financing. Such a screening mechanism will ensure that the credit goes to the right farmers who need it to improve their technical efficiency.

Technical and scale efficiency of cassava production system in Delta State, Nigeria: an application of Two-Stage DEA approach

The present study examines the level of pure technical and scale efficiencies of cassava production system including its sub-processes (that is production and processing stages) of 278 cassava farmers/processors from three regions of Delta State, Nigeria by applying Two-Stage Data Envelopment Analysis (DEA) approach. Results reveal that pure technical efficiency (PTE) is significantly lower at the production stage 0.41 vs 0.55 for the processing stage, but scale efficiency (SE) is high at both stages (0.84 and 0.87), implying that productivity can be improved substantially by reallocation of resources and adjusting operation size. The socio-economic determinants exert differential impacts on PTE and SE at each stage. Overall, education, experience and main occupation as farmer significantly improve SE while subsistence pressure reduces it. Extension contact significantly improves SE at the processing stage but reduces PTE and SE overall. Inverse size-PTE and size-SE relationships exist in cassava production system. In other words, large/medium farms are technically and scale inefficient. Gender gap exists in performance. Male farmers are technically efficient at processing stage but scale inefficient overall. Farmers in northern region are technically efficient. Investments in education, extension services and infrastructure are suggested as policy options to improve the cassava sector in Nigeria.