Determinants of technical efficiency differentials amongst small- and medium-scale farmers in Uganda: A case of tobacco growers

It is argued that technical efficiency is determined by individual farm- and farmer-specific characteristics. Such characteristics may be divided into two groups – demographic characteristics, which dominate the decision making process of the farmer, and socioeconomic and institutional characteristics, which influence a farmer’s capacity to apply the decisions at the farm level. The principal objectives of this study are to explore the potential for improving production efficiencies of farmers and to identify factors that influence such efficiencies. The study uses cross-section data from a sample of 65 small- and medium-scale farmers. A stochastic production frontier approach is used to estimate the farmer-specific technical efficiencies. The estimated efficiencies are then explained by socioeconomic and demographic factors. It is shown that education, credit accessibility and extension services contribute positively towards the improvement of efficiency. These results therefore suggest that if more resources are invested in extension services, the availability of credit is improved and there is less fragmentation of land, then there will be an improvement in technical efficiency of farmers in Uganda.