Economic efficiency of rice production in smallholder irrigation schemes in Southern Malawi

This study used a parametric frontier approach to analyze technical, allocative and economic efficiency levels of smallholder rice farmers and the determinant factors in Nkhate irrigation scheme in southern Malawi. Technical and allocative efficiency levels were analyzed using a trans-log stochastic production function and the trans-log cost frontier function, respectively. Subsequent results from these efficiencies were used to derive the allocative efficiency levels. Inefficiency model was further used to analyze the underlying factors for efficiency differentials amongst the smallholder rice farmers sampled farm households. Results revealed an average technical, allocative and economic efficiency levels of 65%, 59% and 53%, respectively. This suggests that farmers have a rice yield potential of 35% (100%-65%) to be exploited, and can raise their current rice profitability and/or production levels by 47% (100%-59%) by adjusting input use. Soil fertility status, access to credit, household size and farmers experience were among the socio economic factors that influenced efficiency levels of the sampled smallholder rice farmers. It is therefore recommend that a well-functioning input and output markets through better policies and strategies in order to enhance efficiency levels of these smallholder rice farmers be put in place. The smallholder farmers can further be organized into farmer groups that can enhance efficient transfer of technical advice, access to agricultural credits as well as learning and sharing of knowledge among group members.