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Abstract

This paper employs a stochastic frontier model to examine profit inefficiency of rice farmers in the Northern Region of Ghana using farm-level survey data. The efficiency index, based on a half-normal distribution of the stochastic error term is related to farm and household characteristics. The empirical results show that farmers' human capital represented by the level of schooling contributes positively to production efficiency, suggesting that investment in farmers' education improves their allocative performance. Access to credit and greater specialization in rice production, are found to be positively related to production efficiency. A farmer's participation in nonfarm employment and being older, however, reduce production efficiency. Farmers located in areas with better facilities like extension services and agricultural input delivery systems also tend to exhibit greater production efficiency.

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