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Cost efficiency, Morishima, Allen-Uzawa and Cross-Price elasticities among Irish potato farmers in Dedza district, Malawi

Author

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  • Maganga M. Assa

    () (Department of Agricultural and Applied Economics, Bunda College of Agriculture, University of Malawi, Lilongwe, Malawi)

  • Abdi-Khalil Edriss

    (Department of Agricultural and Applied Economics, Bunda College of Agriculture, University of Malawi, Lilongwe, Malawi)

  • Greenwell C. Matchaya

    (The International Water Management Institute, ReSAKSS-SA, Pretoria, R.S.A.)

Abstract

Malawi has experienced a forward shift in its demand for Irish potato (Solanum tuberosum) consumption. Given limited resources at farmers' disposal, meeting the growing demand will require farmers to follow the efficient path of the farm production resources. This paper, therefore, is an attempt to measure the cost efficiency of smallholder Irish potato farmers in Dedza district of Malawi using a translog cost function, inefficiency effect model and input elasticities derived from a system of cost share equations estimated by Iterated Seeming Unrelated Regression method. A multi-stage random sampling technique was used to select 200 Irish potato farmers in Dedza in 2011 from whom input-output data and their prices were obtained. Results indicate that the mean cost efficiency of Irish potato production in Dedza District is 0.67 with scores ranging between 0.15 and 0.94. The cost efficiency differences are significantly explained by non-farm employment, education, credit access, farm experience, degree of specialization, household size and frequency of weeding. The highest input substitution existed between labour and fertilizer, followed by seed-fertilizer. One policy issue is raised; credit should be extended to Irish potato farmers to enable them purchase farm inputs.

Suggested Citation

  • Maganga M. Assa & Abdi-Khalil Edriss & Greenwell C. Matchaya, 2013. "Cost efficiency, Morishima, Allen-Uzawa and Cross-Price elasticities among Irish potato farmers in Dedza district, Malawi," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(1), pages 59-73, April.
  • Handle: RePEc:tei:journl:v:6:y:2013:i:1:p:59-73
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    References listed on IDEAS

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    1. Bravo-Ureta, Boris E. & Evenson, Robert E., 1994. "Efficiency in agricultural production: the case of peasant farmers in eastern Paraguay," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 10(1), January.
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    3. Mulik, Kranti & Featherstone, Allen M. & Marsh, Thomas L., 2003. "Imposing Curvature Restrictions On A Translog Cost Function Using A Markov Chain Monte Carlo Simulation Approach," 2003 Annual meeting, July 27-30, Montreal, Canada 22038, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Ray, Subhash C., 1988. "Data envelopment analysis, nondiscretionary inputs and efficiency: an alternative interpretation," Socio-Economic Planning Sciences, Elsevier, vol. 22(4), pages 167-176.
    5. A. M. Theodoridis & A. Psychoudakis, 2008. "Efficiency Measurement in Greek Dairy Farms: Stochastic Frontier vs. Data Envelopment Analysis," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 1(2), pages 53-67, December.
    6. Blackorby, Charles & Russell, R Robert, 1989. "Will the Real Elasticity of Substitution Please Stand Up? (A Comparison of the Allen/Uzawa and Morishima Elasticities)," American Economic Review, American Economic Association, vol. 79(4), pages 882-888, September.
    7. Hans P. Binswanger, 1974. "A Cost Function Approach to the Measurement of Elasticities of Factor Demand and Elasticities of Substitution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(2), pages 377-386.
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    Cited by:

    1. Joseph Kangile, Rajabu, 2015. "Efficiency in Production By Smallholder Rice Farmers Under Cooperative Irrigation Schemes in Pwani and Morogoro Regions, Tanzania," Research Theses 243447, Collaborative Masters Program in Agricultural and Applied Economics.

    More about this item

    Keywords

    Cost efficiency; elasticity; Irish potato;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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