Credit-Use and Technical Efficiency among Smallholder Banana Producers in Sheema District, Uganda
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Date
2013
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Journal ISSN
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Publisher
International Journal of Accounting and Financial Management Research
Abstract
Credit use among smallholder banana farmers is reportedly on the rise though with a high rate of loan repayment
default in Sheema District. However, research has not responded to this challenge to ascertain whether these farmers use
credit capital efficiently. Using a representative sample of 90 households, technical efficiency of credit-using banana
farmers was estimated within the Cobb-Douglas production framework. Results of the Stochastic Production Frontier
Analysis (SPF) revealed that banana producers were highly efficient, with 90% of the total variation in output arising from
technical inefficiency rather than random variability. Credit capital and labor, as factors of production exhibited
decreasing returns to scale. In the sample, if the average and least-efficient farmers adopted best practices of their mostefficient
counterparts, their output and income streams would improve by 22.8% and 41.3% respectively. Post-secondary
education, plot size for bananas and farming experience were identified as the major factors that would significantly reduce
technical inefficiency. Overall, the current production technology in the banana farming system still needs a lot of
improvement if credit capital is to be used efficiently. The study recommended searching for more productivity-enhancing
technologies, extension training on credit management and appropriate agro-chemical use.
Description
Keywords
Credit Use, Production Elasticities, Sources of Technical Inefficiency
Citation
Kalule, S. W. (2013). Credit Use And Technical Efficiency Among Smallholder Banana Producers in Sheema District Uganda. International Journal of Accounting and Financial Management Research (LJAFMR), 3(4), 41-52.