ASSESSING THE ECONOMIC EFFICIENCY OF CONTRACT AND NON-CONTRACT SOYBEAN FARMERS IN THE NORTHERN REGION OF GHANA

Abstract

This study analyzes the economic efficiency of soybean production under contract and noncontract farming systems in the Northern region of Ghana. Using survey data from 374 soybean farmers, comprised of 200 contract farmers and 174 non-contract farmers, a stochastic frontier analysis and fractional regression models were employed to estimate technical, allocative, and economic efficiencies. The results reveal that contract farmers had a mean technical efficiency of 0.92, allocative efficiency of 0.869, and economic efficiency of 0.943, while non-contract farmers had mean technical efficiency of 0.973, allocative efficiency of 0.734, and economic efficiency of 0.866. Positive determinants of efficiency included education, farming experience, access to extension services, and participation in soybean contract farming. Off-farm activities and crop diversification negatively impacted efficiency. Contract farmers exhibited increasing returns to scale, while decreasing returns to scale prevailed among non-contract farmers. Factors influencing soybean output and production costs were also analyzed. The study highlights opportunities for enhancing soybean productivity and reducing production costs through improved resource allocation, adoption of training and extension services, and promoting contract farming arrangements that provide access to inputs, credit and technical support.

Keywords

• contract farmers
• non-contract farmers
• economic efficiency
• technical efficiency
• allocative efficiency
• soybean farmers