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Are livestock farmers in Kenya efficient? Evidence from a farm-level analysis

Author

Listed:
  • Manyeki John Kibara

    (University of Szeged)

  • Balázs Kotosz

    (IESEG School of Management)

Abstract

The Kenyan livestock sector has a high potential for economic development and poverty reduction amongst smallholder rural communities. The purpose of this paper is, therefore, the estimation of technical efficiency of the livestock farmers with respect to farms heterogeneity. In this way, the paper seeks to address the question of proper model specification of production frontier, distinguishing between inefficiency and farm heterogeneity and the associated influencing determinants. When technology heterogeneity is present in an industry, estimation of a single stochastic frontier will lead to misleading implication about inefficiency policy recommendations. Thus, this technical paper uses the most recent methodological approach (latent class stochastic frontier model) to distinguish different technologies for a representative farm-level sample of 1288 smallholder pastoral livestock households based on the class structure. Our analysis finds that technical efficiency levels rise as the number of classes increases, indicating that unless livestock farmers’ heterogeneity is adequately considered, estimated inefficiency is likely to be biased upward. The observed variation of efficiency score between classes suggests that potential gain can be achieved through indifferent improvement of the farms-specific factors namely the number of livestock production technology adopted, education level, access to markets, access to veterinary drugs and off-farm income. Technical efficiency being between 0.35 and 0.97 is heterogeneous; thereby, only a pro-pastoral policy option based on the identified class structures of the productive unit enables a more accurate and effectual measures to address efficiency challenges within the livestock industry.

Suggested Citation

  • Manyeki John Kibara & Balázs Kotosz, 2022. "Are livestock farmers in Kenya efficient? Evidence from a farm-level analysis," SN Business & Economics, Springer, vol. 2(9), pages 1-30, September.
  • Handle: RePEc:spr:snbeco:v:2:y:2022:i:9:d:10.1007_s43546-022-00299-y
    DOI: 10.1007/s43546-022-00299-y
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    References listed on IDEAS

    as
    1. Sebastian Gechert & Tomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2022. "Measuring Capital-Labor Substitution: The Importance of Method Choices and Publication Bias," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 55-82, July.
    2. Jeremy T. Fox & Valérie Smeets, 2011. "Does Input Quality Drive Measured Differences In Firm Productivity?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(4), pages 961-989, November.
    3. Stevenson, Rodney E., 1980. "Likelihood functions for generalized stochastic frontier estimation," Journal of Econometrics, Elsevier, vol. 13(1), pages 57-66, May.
    4. Sebastian Gechert & Tomas Havranek & Zuzana Irsova & Dominika Kolcunova, 2022. "Measuring Capital-Labor Substitution: The Importance of Method Choices and Publication Bias," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 45, pages 55-82, July.
    5. Nobuhiko Fuwa & Christopher Edmonds & Pabitra Banik, 2007. "Are small‐scale rice farmers in eastern India really inefficient? Examining the effects of microtopography on technical efficiency estimates," Agricultural Economics, International Association of Agricultural Economists, vol. 36(3), pages 335-346, May.
    6. Johannes Sauer & Catherine J. Morrison Paul, 2013. "The empirical identification of heterogeneous technologies and technical change," Applied Economics, Taylor & Francis Journals, vol. 45(11), pages 1461-1479, April.
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    More about this item

    Keywords

    Latent class model; Technical efficiency; Stochastic frontier; Heterogeneous; Livestock production; Kenya;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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