Efficiency Differentials in Peasant Agriculture and TIJ.eir Implications for Development Policies

This paper reanalyzes the theoretical and enpirical work on allocative efficiency in traditional agriculture and presents a new study of technical efficiency among Tanzanian cotton farmers. The theoretical argtents are shown to apply primarily in a competitive context that differs significantly from that in which peasant faros operate. Reanalysis of earlier empirical studies shows that, on average, the marginal value products of inputs differ by more than 40 per cent fro~ the marginal factor costs to which they should be equated under allocative efficiency. Ou~ o~-n. study among Tanzanian cotton farners in Geita District reveals that output could be increased by 51 per cent if all farmers achieved the s=e levels of technical efficiency that were achieved by the best fa=ers in the sample with the same input:s and technologies. These results indicate that the efficiency hypothesis may not be applicable to much of peasant agriculture and that developn2nt policies might fruitfully place nore emphasis an raising large numbers of farmers closer to the relatively high efficiency levels achieved by sona of their neighbors.