Access to Credit and Farm Efficiency in Cameroon: A Data Envelopment Analysis Approach

The aims of this paper is to analyze the effect of access to credit on the technical efficiency of farms in Cameroon’s rural area. Using a sample of 545 farm households, we first estimate a Data Envelopment Analysis (DEA) model with constant returns to scale; then a censored TOBIT model enabling us to identify factors of efficiency, especially the effect of access to credit on efficiency. Two main results emerge from our analysis. First, we find that on average, the level of technical efficiency of farms is 56.78%; showing therefore the possibility of substantial efficiency gains. Second, farm size, association membership, and fertilizer expenditure negatively affect technical efficiency, while access to credit, age and education increase it. Based on these results, we believe that it’s interesting for farm householders to organize themselves in associations to benefit from available credits and financial facilities and to share their experiences in the agricultural field in order to improve their efficiency.

Regional Diversity of Technical Efficiency in Agriculture as a Results of an Overinvestment: A Case Study from Poland

Ensuring adequate profitability of production, which can be ensured by optimal investments, can encourage farmers to be more caring about sustainable development. Several existing studies indicate that technical efficiency in agriculture varies regionally. Investments comprise a basic way to increase efficiency and thus reduce polarisation between regions. However, contrary to established assumptions, not every investment leads to increased efficiency, which entails a phenomenon of overinvestment. Investments should, by definition, be positively correlated with efficiency. However, existing studies indicate the existence of a significant problem of overinvestment, where increased efficiency may not occur. While for about 40% of farms in Poland the scale of investments can be assessed as optimal, more than quarter of farms exhibited absolute overinvestment and nearly one in five farms is underinvested. In response to this problem, this study aimed to identify regional differences in Poland with regard to overinvestment in farms, as well as to determine changes in farm efficiency depending on the region and level of overinvestment. The source material used in the following article consisted of unpublished Farm Accountancy Data Network (FADN) microdata derived from the DG AGRI of the European Commission. The study covered the period 2004–2015. For an original classification of farms according to their level of overinvestment the technical efficiency, using the stochastic frontier analysis approach, was used for determining regional differences that occurred as a result of overinvestment. Stochastic frontier analysis shown noticeable differences in the average technical efficiency for different overinvestment groups. As expected, underinvested farms are the least efficient (general in Poland and in all analyzed regions) and average technical efficiency did not increase. Interestingly, optimally investing farms do not have the highest technical efficiency. Higher efficiency was achieved by both relatively and absolutely overinvested farms. This is due to the fact that in order to produce efficiently in agriculture, it is necessary to at least maintain the level of tangible assets provision, and preferably to increase it as well. In terms of overinvestment levels, farm structure does not differ significantly between individual regions in Poland. However, there are differences between regions in terms of farm efficiency within each group. In all regions, only the underinvested farms did not increase their efficiency over the period under review and the highest efficiency growth rate was in regions where farms were least efficient at baseline.

EFFECT OF LAND OWNERSHIP ON THE TECHNICAL EFFICIENCY OF CROP FARMERS

The essence of this study was to examine the land ownership pattern in Osun State, Nigeria, with a view to assessing its effect on the technical efficiency of the farms. Precisely, the farm efficiency level was estimated; factors that determine farm efficiency were identified, and the impact of land ownership on-farm efficiency was also assessed. A three-stage random sampling was used to select 144 respondents. Data collected using a pretested interview schedule was subjected to descriptive statistics, stochastic production frontier function, and average treatment effect. The results show that land ownership by absolute interest accounted for about 65% of the farmers. The mean technical efficiency level of the farms was 47%. Farm size and labour are necessary factors to be increased to have increased output. The non-access to credit and land ownership by absolute interest constituted to technical inefficiency of the farms. Similarly, ownership of farmland by absolute interest reduced efficiency by 24% among sampled farmers and 25.5% among owners of farmland. The study, therefore, suggested that farm size should be increased, and credit facilities are made available to farmers to facilitate the acquisition of necessary inputs to increase output given the existing technology. This can be by way of making accessible to food crop farmers, lands belonging to the government, which are currently not in use.