Free Access | June 0002

Determinants of technical efficiency differentials amongst small and medium scale farmers in Uganda: A case of tobacco growers

Authors/Editors: Marios Obwona

Abstract:

It is argued that technical efficiency is determined by individual farm-and farmer-specific characteristics (Shapiro and Muller, 1977). Such characteristics may be divided into two groups demographic characteristics, which dominate the decision making process of the farmer and socio-economic and institutional characteristics, which influence a farmer's capacity to apply his decisions at the farm level. The principal objectives of this study are to explore the potential of improving production efficiencies of farmers and identify factors that influence such efficiencies. The study uses cross-sectional data from a sample of 65 small and medium scale farmers. A stochastic production frontier approach is used to estimate the farmer-specific technical efficiencies. The estimated efficiencies are then explained by socio-economic and demographic factors. It is shown that, education, credit accessibility and extension services contribute positively towards the improvement of efficiency. These results therefore suggest that if more resources are invested in extension services, improved availability of credit, with less fragmentation of land, then there will be an improvement in technical efficiency of farmers in Uganda.