Inefficiency of rice production in Kilombero-Tanzania from stochastic profit frontier model: Farming household as a unit of analysis

Abstract

Rice grain is substantially touching livelihoods of majority in the world since half of the world’s human population rely on the grain for food. Tanzania as a country has been trying to produce rice tremendously in an effort to make livelihoods of its people, making the country in first ranking for East African region in rice production. However, such a good position of the country in rice production has not been reflected in the profit that farming households accrue. This study surveyed 100 farming households in Kilombero district as a showcase to understand why there has been such economic inefficiencies. This research paper used Stochastic Profit Frontier Model (SPFM) to test the hypothesis that socioeconomic aspects do not explain profit inefficiencies of farming households. Results from SPFM showed that farming households in the study area experience economic inefficiency of 24.1% which has been caused by their state of not being technically and allocatively efficient. Further, labor cost was found leading determinant of economic efficiency among other factors. Inefficiencies in profit were eventually found being attributable to socioeconomics specifically irrigation technology used, participation to off-farm economic activities and access to support services like extension and credit facilities. Finally, findings suggest that labor sharing cooperative society could be formed in the study area for labor expense minimization and the conduction of technical trainings to farmers is generally vital to make them producing efficiently especially from economic sense.