Assessing the Economic Efficiency of Maize Production in Northern Ghana

Abstract

This study used the stochastic frontier model to examine the technical, allocative and economic efficiency of maize production in northern Ghana using cross-sectional data for the 2011/2012 cropping season. Conventional inputs such as farm size, seed, fertilizer, labour and weedicides were statistically significant and had positive effects on maize output in northern Ghana using the Cobb-Douglas functional form. The mean estimates were 85.1%, 87.8% and 74.7% for technical, allocative and economic efficiencies respectively. Largely, maize production in the study area exhibited increasing returns to scale. The determinants of technical inefficiency were experience, agricultural extension service and gender. Farmers with many years of experience in maize production were more technically efficient and opportunities that bring the less experienced farmers to tap the accumulated knowledge of the more experienced ones would improve maize production. Farmers who had access to agricultural extension services were more technically efficient than those who did not have access and strengthening the extension service would further enable them improve on their technical efficiency. Male farmers were more technically efficient than females in maize cultivation and efforts that stress gender equality as regards access to economic resources, information and decision-making would help narrow this gap. There is allocative inefficiency relative to all the production inputs under the prevailing prices. Land, seed and weedicides would be allocatively efficient by increasing their use by 26.6%, 10.52% and 39.9% respectively. Fertilizer and labour are currently being over-used and requires 82.8% and 94.5% reductions respectively to reach their allocatively efficient points.

Keywords: Stochastic Frontier Analysis, Technical Efficiency, Allocative Efficiency, Economic Efficiency, Maize, Northern Ghana

An Errata has been published for this article in vol 14 (2) 2017. You can find the link to this Errata here: https://www.ajol.info/index.php/gjds/article/view/162547 
DOI: https://dx.doi.org/10.4314/gjds.v14i2.16