IJSRP, Volume 4, Issue 10, October 2014 Edition [ISSN 2250-3153]
Nathaniel Naftali Kalimang`asi, Agrey Kihombo (PhD) and Natalia Kalimang`asi
This study centred on assessing the effect of key determinants of technical efficiency in cocoa production through contract farming drawing experience of Kilombero and Kyela districts. Primary data were collected using structured questionnaires. Probability sampling design was used to obtain respondents from smallholder farmers. Whereby cross-sectional data were collected using structured questionnaire from the sample size of 271 respondents in Kyela and Kilombero Districts. The stochastic production frontier function was estimated by using maximum likelihood estimation (MLE), data was analysed by using NLOGIT software version 5. Overall results show that 41 percent (n=111) of smallholder farmers had a mean technical efficiency below 50 percent and thus are considered to be technically inefficient while 59 percent (n=160) of them were technically efficient by more than 50 percent. These smallholder farmers were technically efficient in terms of number of hours spent in farms, labour training, experience, distance and size of labourer. Moreover, results show that smallholder farmers agreed that being in contract had increased access of training (89.3% (n=242)), credits (80.8% (n=219)), production quantity (73.1% (n=198)), production acreage (71.7% (n=194)), timely purchase (92.9% (n=252)) and timely payment (95.2% (n=258)). Whereas, the results show that 67.47% (n=183) of respondents said, contract farming had no impact on timely inputs and 74.9% (n=203) of respondent disagreed that contract farming helped to introduce new technology. Thus, the study concluded that there is great possibility for technical efficiency to increase agricultural productivity in contract farming.