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Stochastic frontier analysis (SFA) of technical efficiency, insights from smallholder cotton farmers in the Northern Region of Ghana

Abstract

Awal Abdul-Rahaman

This study analyzed technical efficiency of smallholder cotton farmers in three selected districts of the Northern Region using stochastic frontier production function approach. Multi-stage sampling procedure was employed to select 150 smallholder cotton farmers in the 2009 growing season. Maximum likelihood estimation procedure was used to obtain the determinants of technical efficiency and technical efficiency levels of cotton farmers. The results show that the technical efficiency of smallholder cotton farmers in the area ranges between 16.05% and 98.13% with mean efficiency score of 84.5% suggesting that average smallholder cotton farmer in the Northern Region would have produced 15.05% more output with the same level of inputs if the farmers were to produce on the most technically efficient frontier. The main determinants of technical efficiency include age, association membership, education, family size, age of farm, extension visits and cotton farmer’s experience. Policies that would make the youth return to take up cotton farming would yield positive dividends. Cotton companies should periodically organize training workshops for cotton farmer associations on organizational capacity building in the area of group formation and development to enable them become dynamic and cohesive which will ultimately change their attitude towards operating within their respective farmer associations.

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