Determinants of Profit Efficiency among Rice Farmers in Kilombero Valley, Morogoro, Tanzania

Abstract

Farmers in the Kilombero Valley are experiencing a growing trend towards commercialization seen through the expansion in the cultivated land area rather than agricultural intensification. There is a modicum of information on whether the observed increase in commercialization in the area is associated with an increase in profit. This study used the stochastic profit frontier function to estimate the profit efficiency of rice commercializing farmers and the respective determinants. The study used data collected from 377 rice farmers who were selected by using a multi-stage stratified sampling method. Results indicate that rice commercialising farmers' mean profit efficiency level was 75.65%. This indicates that rice farmers can improve their efficiency levels by 24.4% without increasing the level of inputs used. Maximum likelihood estimates indicated that wage, price of fertilizer, rice area in hectares, and production assets value were significant in determining the profit efficiency of rice commercializing farmers in Kilombero. The study concludes that commercializing farmers in the study area was profit efficient. The study recommends that more emphasis on early formal education in farmers’ society be emphasized for the literate group is more profit-efficient than the illiterate. With the present national educational policy to support education, farming households should strategically take advantage of it as education has exhibited a positive impact on their efficiency. Different services (marketplaces and inputs dealerships) in the area should be improved further to create more room for rice farmers to improve their productivity and profitability.