Farm Household Production Efficiency: Evidence from The Gambia

Jean-Paul Chavas (), Ragan Petrie and Michael Roth

No 2003/05, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: This paper investigates the economic efficiency of farm households, with an application to The Gambia. The efficiency analysis is conducted not at the farm level but at the household level, thus capturing the importance of off-farm activities. Output-based measures of technical, allocative and scale efficiency are generated using nonparametric measurements. An econometric analysis of factors affecting the efficiency indexes is then conducted using a Tobit model. Technical efficiency is fairly high indicating that access to technology is not a severe constraint for most farm households. A large number of farm households are found to be scale inefficient, but the cost of scale inefficiency is modest. Allocative inefficiency by contrast is found to be important for the majority of farm households. Based on the Tobit results, imperfections in markets for financial capital and non-farm employment contribute to significant allocative inefficiency. The econometric results also suggest that institutional reform designed to improve the functioning of factor markets would have large positive effects on household welfare.

Pages: 42
Date: 2003
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Journal Article: Farm Household Production Efficiency: Evidence from The Gambia (2005)
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