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Technical efficiency in Kenyan’s maize production: an application of the stochastic frontier approach

 

Author(s):  Kibaara, Betty
Introduction

The primary objective of this study is to estimate the level of technical efficiency in maize production in Kenya using the Stochastic Frontier Approach. The study will also attempt to determine some socio-economic characteristics and management practices which influence technical efficiency in maize production. Technical efficiency is defined as the ratio of the observed output to the corresponding frontier and is estimated from the composed error term. Previously, technical efficiency was estimated in a two-stage process.

This study utilizes the most recent development in the stochastic frontier modeling by using a one-step process in Limdep and primary cross-sectional rural household data for the 2003/2004 main harvest-cropping season provided by Tegemeo Institute of Agricultural Policy and Development in Kenya.

To ensure unbiased results, the model is corrected for heteroscedasticity, by weighing each variable by an estimated variance. In addition, the orthogonality condition that ensures a zero covariance between the independent variables and the error term is imposed. Responsiveness of yield to production inputs is also estimated by computing input elasticities. The marginal value product for fertilizer, labor and seed are also calculated. Finally, the marginal effects of the variables associated with inefficiency are calculated.

Results indicate that the mean technical efficiency of Kenya’s maize production is 49 percent; however, this ranges from 8 to 98 percent. There is distinct intra and interregional variability in technical efficiency in the maize producing regions. In addition, technical efficiency varies by cropping system; the mono-cropped maize fields have a higher technical efficiency than the intercropped maize fields. The number of years of school the farmer has had in formal education, age of the household head, health of the household head, gender of the household, use or none use of tractors and off-farm income impact on technical efficiency.

The estimated marginal effect shows that, ceteris paribus, the use of purchase hybrid maize seed increase technical efficiency by 36 percent (6.14 bags). Mechanization is also important. Households that used tractors for land preparation increased technical efficiency by 26 percent (4.41 bags). An additional year of school increases technical efficiency by 0.84 percent (0.14 bags). However, technical efficiency increases at a decreasing rate with an increase in the number of years of school. The model also suggests that a maize producer needs only an elementary education (5 years of school) to be technically efficient.

Technical efficiency in Kenyan's maize production: an application of the stochastic frontier approach

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