Does Type of Tenure Impact on Technical Efficiency of Farmers? (A Comparative Analysis of Owner-Operators and “Tenants”)

Abstract

This study tries to examine the technical efficiency of farmers and investigate its variation between owner-operators and tenants. A Cobb-Douglas stochastic frontier production function and other econometric tools are employed on a cross-section data of 340 households. Mean technical efficiency of sample households is found to be around 62.8 percent, revealing a considerable potential for output gains under the given technology. Farmers having less than two hectares of land and “literate individual” headed households reported higher efficiency. Wealth, credit, fertilizer and rainfall contributed significantly to increase production. Regardless of tenancy-associated problems, no significant efficiency gap is observed between owner-operators and tenants. Although, it requires further inquiry to have a strong position, encouraging land rent/lease among farmers holding an incompatible resource mix could enhance efficiency. Findings suggested that efforts should be exerted towards providing training and extension services, developing small-scale irrigation schemes and expanding the coverage of credit provision to improve productive use of resources of farmers operating in both tenure systems.