Technical efficiency and production risk of maize production: Evidence from Ghana

Abstract

The paper performs an investigation of maize production efficiency in Ghana by the stochastic frontier model with flexible risk properties using a cross section of 232 farms from the Brong-Ahafo Region. The findings of the study are the translog model is best fit for the mean output function, whilst the input variables: seed, herbicide, land, labor and cost of intermediate inputs positively influence maize output at decreasing returns to scale. The study also finds that seed and labor inputs are negatively related to production risk, whilst land and cost of intermediate inputs are classified as risk increasing inputs. The average technical efficiency estimate is 62% and the combined farm specific factors explain the variation in technical efficiency. The study concludes that on the average 38% of potential output is lost due to technical inefficiency and production risk in inputs and the use of the best farm practices contribute to produce maize optimally.