MACROECONOMIC SHOCKS, HUMAN CAPITAL AND PRODUCTIVE EFFICIENCY: EVIDENCE FROM WEST AFRICAN FARMERS

Little empirical work has quantified the transitory effects of macroeconomic shocks on farm-level production behavior. We develop a simple analytical model to explain how macroeconomic shocks might temporarily divert managerial attention, thereby affecting farm-level productivity, but perhaps to different degrees and for different durations across production units. We then successfully test hypotheses from that model using panel data bracketing massive currency devaluation in the west African nation of Cote d'Ivoire. We find a transitory increase in mean plot-level technical inefficiency among Ivorien rice producers and considerable variation in the magnitude and persistence of this effect, attributable largely to ex ante complexity of operations, and the educational attainment and off-farm employment status of the plot manager.Labor and Human Capital, O1, Q12, Q18,

Africa's Food Crisis: Conditioning Trends and Global Development Policy

African countries continue to face deepening food crises which have been accentuated by the global food, energy and financial crises. This situation is part of a long term structural problem: decades of under-investments in agricultural sector and poor policies of support for smallholder farmers who form the bulk of the farming population. The inability of these farmers to achieve a supply response when commodity prices were high and market access was less of a problem suggests that there are multiple sets of binding constraints that continue to limit the potential of agricultural growth to reduce food security and poverty on the continent. What the continent needs is a smallholder-based green revolution that can help raise agricultural productivity and lift millions out of poverty. Many challenges face the achievement of the green revolution in Africa. This paper reviews some of the historical trends that have hampered the performance of the agriculture sector. In addition, it reviews the impacts of more recent trends including the global financial crisis, public sector investments, inequities in global agricultural development policies, rush for agricultural lands by foreign investors, domestic commercial financing markets, climate change and emerging carbon markets. The paper argues that while opportunities for accelerated growth exists for African agriculture, new sets of policy instruments will be needed to support smallholder farmers to access new agricultural technologies, finance, reduce impacts of climate change and adopt sustainable land use practices that can allow them to benefit from emerging global carbon markets

Global food and financial crises: lessons and imperatives for accelerating food production in Africa

This paper critically reviews the effects of the global food and financial crises on developing countries, with specific focus on Africa. While assessments of the intertwined effects of the crises have often focused on short-term transitory causal factors, this paper takes the view that the causes of the food crises in Africa are long term and fundamentally structural. Policy measures to address the food crises therefore should focus on resolving the long-term structural impediments to accelerated agricultural growth. The paper argues that market fundamentalist policy prescriptions have failed in Africa and are at the root of the high poverty and food insecurity being experienced by African countries. Externally imposed policy prescriptions of one size fits all are inimical to the growth of African agriculture, and to self-reliance in food production, given the increasing unreliability of global markets for accessing food. Africa needs to take bold steps to accelerate food production using home-based policies that are better aligned with its state of economic growth and development, as well as level of poverty. Policy recommendations to accelerate food production include greater investments to raise the productivity of staple food crops; ‘growth enhancement support’ (GES) to unlock poverty traps by combining public farm support for farmers with risk sharing instruments that will unlock financing for farmers and agribusinesses, and speed up the process of commercialization of smallholder agriculture; policies to promote expanded use of fertilisers; seed policies to expand the use of improved seeds and the growth of the private sector seed industry; leveraging commercial bank financing into agriculture through risk-sharing instruments; focusing investments within the breadbasket areas of African countries, where the rate of returns on investments will be high; policies to improve climate change adaptation; and a greater strategic role for the state in correcting for market failures, making investments in public goods, supporting farmers, and guiding the market systems to accelerate food production

SMALLHOLDER TECHNICAL EFFICIENCY WITH STOCHASTIC EXOGENOUS PRODUCTION CONDITIONS

WP 1998-15 December 1998JEL Classification Codes: 012; Q12; D2There is a large literature on the estimation of frontier production functions, much of it applied to low-income agriculture. However, much of this literature largely ignores nature's role in agricultural production. Because exogenous, natural production conditions (e.g., rainfall, soil quality, pest infestation, plant disease, weed growth) are rarely uniform or symmetrically distributed within a population or a sample thereof, this omission generally leads to downward bias in producers' estimated efficiency and to biased estimates of both the parameters of the production frontier and the correlates of true technical inefficiency. Using panel data from 464 traditional rice plots in Cote d'Ivoire, we show that controlling for stochastic, exogenous, natural production conditions in estimating the production frontier significantly increases smallholder rice farmers' estimated efficiency, whether estimated using parametric, stochastic or nonparametric, nonstochastic methods. The resulting frontier parameter estimates are also more consistent with theoretical predictions than are those of a frontier estimated without controlling for exogenous production conditions. Conventional estimates of technical efficiency may then mislead policymakers' perceptions of overall efficiency levels and of the sources of such inefficiency

Macroeconomic shocks, human capital and productive efficiency: Evidence from West African farmers

WP 2003-18 May 2003Little empirical work has quantified the transitory effects of macroeconomic shocks on farm-level production behavior. We develop a simple analytical model to explain how macroeconomic shocks might temporarily divert managerial attention, thereby affecting farm-level productivity, but perhaps to different degrees and for different durations across production units. We then successfully test hypotheses from that model using panel data bracketing massive currency devaluation in the west African nation of Cote d'Ivoire. We find a transitory increase in mean plot-level technical inefficiency among Ivorien rice producers and considerable variation in the magnitude and persistence of this effect, attributable largely to ex ante complexity of operations, and the educational attainment and off-farm employment status of the plot manager

Farm size, relative efficiency and agrarian policy in Cote d'Ivoire: profit function analysis of rice farms

This paper examines the relative economic efficiency of small and large rice farms in Cote d'Ivoire using a profit function approach. No differences in the relative economic efficiency of small and large farms were found. This conclusion is robust under alternative model specifications. Agrarian reforms directed towards further concentration of landholding for large farms in Cote d'Ivoire cannot be justified based on economic efficiency. Results show that access to credit and use of modem rice varieties significantly increase profits. To improve technical efficiency of rice farms, an accelerated program to provide information, credit, improved seeds and other inputs is needed. When all the farms (i.e. large and small) are taken together, there is evidence of allocative inefficiency. Strategies are needed to remove such management related inefficiencies in rice production either through the development of a better market price information system or effective farmer-oriented technical training programs by rice extension workers

Relative efficiency of women as farm managers: Profit function analysis in Cote d'Ivoire

The efficiency of women fanners in the agricultural sector of developing countries is passionately debated. Very few studies have examined this issue in African agriculture. All previous studies were based on production functions, but have been criticised as suffering from simultaneous equation bias because the input levels are endogenous. The profit function method avoids these problems. No previous study has used the profit function method to test for technical, allocative and economic efficiency differences between women and men farmers. The objective of this paper was to determine whether women rice farmers are less efficient than men rice farmers in Cote d 'Jvoire using the restricted normalised profit function method. Our results show that the relative degree of efficiency of women is similar to that of men. The paper provides empirical support for efforts to eliminate bias against women fanners in African agriculture

Farmers' perceptions and adoption of new agricultural technology: evidence from analysis in Burkina Paso and Guinea, West Mrica

Economists investigating consumer demand have accumulated considerable evidence showing that consumers generally have subjective preferences for characteristics of products and that their demand for products is significantly affected by their perceptions of the product's attributes. However, the role of farmers' preferences in adoption decisions have received very limited attention in adoption studies conducted by economists. This paper tests the hypothesis that farmers' perceptions of technology characteristics significantly affect their adoption decisions. The analysis, conducted with Tobit models of modern sorghum and rice varietal technologies in Burkina Paso and Guinea, respectively, strongly supports this hypothesis. Our results provide a strong case for future adoption studies to expand the range of variables used away from the broad socio-economic, demographic and institutional factors to include farmers' subjective perceptions of the characteristics of new agricultural technologies

Peasant farmer behavior and cereal technologies: Stochastic programming analysis in Niger

Peasant farmers in Sahelian West Africa adjust to rainfall uncertainties in the agricultural season by making decisions sequentially as a function of the evolving rainfall patterns. Understanding such flexibilities in farmer decision-making is central to technology introduction. This paper determines how sequential decision-making under weather uncertainty affects the adoption and farm-level effects of cereal technologies in Niger. The study also draws policy implications for a price floor to arrest the substantial fall in cereal prices in good rainfall years when farmers have more grains to sell. The methodology used is Discrete Stochastic Programming. This paper shows that the ability of peasant farmers to adapt cropping and resource-management strategies to the rainfall patterns is the basis for their survival in this highrisk environment. Model results show that by (a) carrying a portfolio mix of varieties of varying maturities, and (b) making sequential decisions based upon rainfall expectations, farmers can adapt to the production uncertainties. Breeding programs should therefore be diversified to develop not only early-maturing cultivars, but also improved intermediate and long-season varieties