Technical Efficiency in Agriculture in Ghana-Analyses of Determining Factors

Abstract

The paper sought to estimate technical efficiency in Ghana’s agricultural sector and more importantly, investigate the factors that influence the estimated technical efficiencies. Using data from 1976-2007, the results showed a decreasing returns to scale in Ghana‘s agriculture. Land is negatively inelastic showing over use of the factor. Technology variables, fertiliser and tractor and combines are positively related to output. Whilst fertiliser is elastic, tractor and combines is inelastic. The level of inefficiency is 21% with decreasing returns to scale. The SFA specification is the appropriate model, indeed, superior to OLS. None of the hypothesised variables to explain technical efficiency were statistically distinguishable from zero. The negative sign for land requires decrease in the use of land relative to other inputs. This calls for increase in the use of other variables. The insignificance of the TE effect variables suggest that these variables may be inappropriate in explaining TE in the case of Ghana. Other variables may have to be explored.

Keywords: technical efficiency, agriculture, Ghana, determinants