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

Abstract

Aims: This study focused on determining the level of technical efficiency (TE) and its corresponding common factors across all crops grown by Tanzanian smallholder farmers. The motive of this study came from production theory and production efficiency and the research was strongly attracted by the ongoing subsistence nature of the agriculture sector in the country that doesn’t fully meet the desired productivity Methology: 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 by employing a single-step stochastic frontier model with an assumption of a Cobb-Douglas production function. Results: 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. Conclusion: As per the results, improved seeds and inorganic fertilizers are essential, however farmers organizations act as stumbling blocks. Thus, in this regard, Tanzanian farmers still have a room to improve and unlock their full potential, and so it is imperative for the government to take immediate measures to improve their technical efficiency such as introduction of more irrigation schemes, improved seed subsidies among others and farmers organizations should also be enhanced and streamlined to support farmers efficiency.