Technical Efficiency: Are Zambian Cotton Farmers Lagging Behind?

Cotton is produced by over 150,000 smallholder households, representing 10 percent of smallholder farmers in Zambia. The sector has grown in terms of production from less than 50,000 metric tonnes (mt) of seed cotton in 1994, to as high as 275,000 mt in 2012, with an average of 110,000 mt for the period 2005 to 2015. This is mainly due to the increase in number of ginning companies and investments in gins, from two to about 11 ginning companies with a ginning capacity of over 300,000 mt per annum in total. Despite all these positive strides, productivity of cotton smallholder farmers remains low. Low productivity in cotton confines farmers to a perpetual vicious poverty trap and makes the sector grossly uncompetitive. Turning the sector around to make it more efficient, more competitive and more viable must be important for stakeholders and policy makers alike.

The primary data used in this study comes from the Post-Harvest Survey of 2010/11 conducted by the Central Statistics Office (CSO) and, the Ministry of Agriculture and Livestock (MAL). Using the Data Envelopment Analysis (DEA) and supplemented by the Stochastic Frontier Approach (SFA,) the study examined the technical efficiency of cotton farmers in Zambia. In the second stage, an Ordinary Least Squares (OLS) was used to determine the sources of efficiency among cotton farmers in Zambia. The study further examined the impact of technical efficiency on the welfare of cotton farmers.