PRODUCTION RISK AND TECHNICAL EFFICIENCY OF LOWLAND RICE FARMS IN ASHANTI REGION, GHANA

ABSTRACT

The study was conducted to analyse production risk and technical efficiency of lowland rice farms in Ashanti region using adjusted stochastic production frontier. Cross sectional data for 2014 cropping season was collected from 200 sampled rice farms using multistage sampling technique. The results of the study revealed very low utilization of improved seed (42.8 kg/ha) by famers as against the standard quantity of 100kg/ha. Among the farm inputs used, fertilizer and improved seed were significant at 1% and found to be risk reducing inputs. The partial elasticity estimates indicated that fertilizer (0.57) and improved seed (0.44) used by farmers contributed largely to lowland rice productivity in the study area. The computed return to scale for the lowland rice farms demonstrated decreasing return to scale. The average productivity of lowland rice in the study area was 3.7Mt/ha as compared to the national average of 2.5 Mt/ha. Approximately 33.6% of the sampled rice farms produced below the national average whereas 66.7% produced above it. About 85% of the sampled rice farms produce below the national potential yield of 6.5Mt/ha. The mean technical efficiency estimates (77%) of the study suggest that extra 23% of the rice output can be produced by the rice farmers without any additional farm inputs. The results of the inefficiency estimates indicates that improved seed-usage, shorter farm distance, farmer access to extension services, basic education, mechanization services and canal maintenance reduces technical inefficiency. The study therefore recommends that stakeholders in agricultural sector should increase input outlets to enable rice farmers have access and use more of fertilizer and improved seed to increase production. Ministry of Food and Agriculture should continue with the extension service provision to educate farmers on how to follow good agronomic management practices for rice production such canal maintenance to reduce production inefficiency. Factors that make credit to contribute to lowland rice production inefficiency should be investigated and addressed by stakeholders.