Agricultural Technical Efficiency of Smallholder Farmers in Tanzania: A Stochastic Frontier Approach

Abstract

Production efficiency across sectors of the economy is now a main point of discussion due to the growing threat of food insecurity soon. This study focused on determining the level of technical efficiency (TE) and its corresponding common factors across all crops grown by Tanzanian smallholder farmers by employing a single-step stochastic frontier model with an assumption of a Cobb-Douglas production function. The motive of this study comes from production theory and production efficiency. The study employed the cross-sectional National Sample Census of Agriculture 2019/2020 dataset while focusing on smallholder farmers operating in the long-rainy season. The results of production on frontier show that land size (Ha), seeds (Kg), and fertilizers (Kg) are the main requirement for smallholder farmers to produce their maximum output. Based on the efficiency equation, improved seeds, inorganic fertilizers, and access to extension services decrease farmers' technical inefficiency while household age and membership in a cooperative organization increase farmers' technical inefficiency. Further, the average level of technical efficiency among smallholder farmers in Tanzania is 56.7% which allows farmers to increase their output level up to 43.2% with the same level of inputs. JEL Classification: C2, C21, Q12, Q13