A Stochastic Frontier Analysis of the Technical Efficiency of Smallholder Tobacco Farmers in the Makoni District of Manicaland Province, Zimbabwe: A Case Study of Contract Farming

Abstract

This research examined the technical efficiency of smallholder tobacco farmers in Zimbabwe's
Makoni area. It used a sample of 98 randomly chosen farmers, with 78% being contract farmers and 22%
not being on contracts, to determine the influence of contract farming on technical efficiency. The research
estimated the production function and technological efficiencies using stochastic frontier analysis. A mean
technical efficiency of 94% was seen among contract farmers, compared to 67% among non-contract
farmers. Tobacco smallholders in the Makoni area have an average technical efficiency of 73%. These
findings demonstrate that contract tobacco growers outperform their non-contract counterparts in terms of
efficiency. Fertilizer and fixed expenses are significant inputs in smallholder tobacco production, according
to the data. Even more crucially, the research showed that farmers' technical efficiency is much enhanced
by contract farming. The difference in efficiency between contract and non-contract farmers is 10.84
percentage points, which is statistically significant at the 5% level. Technical efficiency is enhanced by
factors such as a farmer's degree of education, total cropping area, and gender, but it is diminished by factors
such as access to loans other than contract farming financing. The study's conclusions suggest that, in order
to boost tobacco growers' total output, the government should encourage more people to get into contract
farming agreements, especially women farmers (there are now only 4.5% female contract farmers).