Economic efficiency of small farmers in a changing world: A survey of recent evidence

Abstract

The growing literature on economic efficiency of farmers in Third World agriculture is reviewed with emphasis on conceptual and methodological issues, and empirical results of studies aimed at measuring technical efficiency. While substantial methodological progress has been made in measuring inefficiency, important conceptual problems remain. Results from regions undergoing rapid technological change suggest substantial technical inefficiencies, of the order of 30 per cent, as well as allocative inefficiencies on the use of purchased inputs. Most studies are able to relate levels of inefficiency to farmers' information and skills, and input supply problems. The results suggest that further improvements in productivity in Green Revolution areas will need to give more emphasis to exploiting the technical efficiency ‘gap’ through adaptive research, extension, farmer education, and improved input supply.