Allocative efficiency of smallholder common bean producers in Uganda: A stochastic frontier and Tobit model approach

Abstract

The study evaluated allocative efficiency levels of common bean farms in Eastern Uganda and the factors influencing allocative efficiencies of these farms. To achieve this objective, a sample of 480 households was randomly selected in Busia, Mbale, Budaka and Tororo districts in Eastern Uganda. Data was collected using a personally administered structured questionnaire with a focus on household decision makers; whereas a stochastic frontier model and a two limit Tobit regression model were employed in the analysis. It was established that the mean allocative efficiency was 29.37% and it was significantly influenced by farm size, off-farm income, asset value and distance to the market. Therefore the study suggested the need for policies to discourage land fragmentation and promote road and market infrastructure development in the rural areas. The study also revealed the need for farmers to be trained on entrepreneurial skills so that they can invest their farm profits into more income generating activities that will harness more farming capital.

Keywords

• Allocative efficiency
• Stochastic frontier approach
• Common bean
• Uganda