Production risk and technical (in)efficiency amongst smallholder livestock farmers in Botswana: An exploratory investigation

Franklin Amuakwa-Mensah, B. Chube, Y. Surry and S. Bahta

No 277276, 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia from International Association of Agricultural Economists

Abstract: This article investigates production (in)efficiency and production risk among smallholder livestock farmers in Botswana. Using cross-sectional data for beef production households, we estimate stochastic production frontier model that accommodates both technical inefficiency and production risk simultaneously. Heteroscedasticity is assumed for both inefficiency and production risk functions. Potential endogeneity of off-farm income is investigated using the control function approach. The empirical results indicate that the deterministic beef production function exhibits decreasing returns to scale and it is mainly explained by herd size and capital equipment. Non-linear relationship between inefficiency and herd size is established with an inverted U shape. Whereas, off-farm income reduces inefficiency, an increase rainfall and household size were found to increase inefficiency. In addition, production risk increases with an increase in maximum temperature and off-farm income but reduces with an increase in rainfall. The average inefficiency and risk scores for beef production are 9.4% and 3.2% respectively. Acknowledgement :

Keywords: Livestock; Production/Industries (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-agr and nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae18:277276

DOI: 10.22004/ag.econ.277276

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