Farm size and productive efficiency: lessons from Mbinga coffee farmers
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Date
2013
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Abstract
Productive efficiency measurement is very important both in developed and developing
countries’ agriculture and its roles arc widely recognized by farmers, researchers and
policy makers. This study attempts not only to investigate the farm size and productivity
relationship debate, which has not gone through a complete circle in Tanzania, but also
to find out whether inefficient resource use by farmers is a problem. Both technical and
allocative efficiency were used to analyse productive efficiency. In this study, a direct
measure of production efficiency of Mbinga coffee farmers using a stochastic profit
frontier and inefficiency effects model was employed. The findings show that there are
high levels of inefficiencies in Mbinga coffee production. The mean level of profit
efficiency is 52.4% which implied that an estimated 47.6% of the profit is lost due to a
combination of both technical and allocative inefficiency in coffee production. Farmers
are losing about TAS 787 696 per mean index of coffee trees due to this inefficiency.
Moreover, it was also revealed that, it would be more profitable if farmers increased
their farm sizes from 501 to 1500 coffee trees. This would help to alleviate poverty
through increased farm profit. The efficiency differences were explained largely by the
household size, farmer’s experience, age of coffee trees, the education level, extension
services, level of capital, and time used by a farmer to move from one coffee farm to
another. It is concluded that very small and small size farms are associated with more
profit-loss compared to medium size farms. It is recommended that farmers should
increase their farm sizes at least to medium farm sizes of more than 1 262 coffee trees in
order to increase coffee farm efficiency. Potential stakeholders should put in place
initiatives which will create conducive environment for improving efficiency and
profitability in coffee production business.
Description
MSc. Dissertation in Agricultural Economics
Keywords
Researchers, Coffee farmers, Farm size, Mbinga district