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\hypersetup{pdftitle={Determinants of Resource Allocative Efficiency of Smallholder Pepper Farmers in Ghana},pdfauthor={Jacob Asravor},pdfsubject={Tropentag 2016: Abstract},pdfkeywords={Allocative efficiency, determinants, Ghana, resources, southern horticultural belt, stochastic frontier cost function},pdfpagemode=None,colorlinks=true}
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\parbox[b]{13.4cm}{\centering \large{\textbf{Tropentag, September 18-21, 2016, Vienna, Austria}}\\[1ex] \Large{``Solidarity in a competing world ---\\fair use of resources''\\[2ex]}}
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\Large{\textbf{Determinants of Resource Allocative Efficiency of Smallholder Pepper Farmers in Ghana\footnote{\textbf{Contact Address:} Jacob Asravor, University of Hohenheim, Inst. of Agricultural Sciences in the Tropics (Hans-Ruthenberg-Institute), 73765~Stuttgart, Germany, \mbox{e-mail}: \email{djgharo@gmail.com}}\\[0.8ex]}}
\normalsize{\textsc{Jacob Asravor}}
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\begin{itemize*}
\item[]{\small{\textit{University of Hohenheim, Inst. of Agricultural Sciences in the Tropics (Hans-Ruthenberg-Institute), Germany}}}
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\textbf{Abstract}
\begin{abstract}
\normalsize{
Pepper cultivation has become a very lucrative business in Ghana serving as a major source of livelihood for some one million rural and urban households. Similar to any decision making unit, pepper farmers in Ghana are frequently faced with the challenge of how to efficiently allocate their limited resources so as to produce the optimal level of output. This is because, inefficient resource allocation either increases production costs or reduce the level of output produced. This study employs the stochastic frontier cost function to examine the level of resource allocative efficiency and its determinants of some selected pepper farms in Ghana. Primary data was collected on 200 pepper farms from the southern horticultural belts of Ghana using a multistage sampling approach.



The empirical findings reveal that all the input price variables contributed positively and significantly to the total cost of pepper production. Pepper output however responded negatively to the total cost of pepper production, an indication that pepper output may decline if more productive resources are used. The results further indicate that allocative efficiency estimates ranged from 37.23\,\% - 99.95\,\% with a mean of 92.76\,\%. This shows that farmers in the study are fairly efficient in allocating the limited resources at their disposal and are only operating at 7.24\,\% above their minimum cost frontier. The gamma value off 0.99 implies that about 99\% of the total deviation from the minimum cost frontier is due to allocative inefficiency. Factors such as level of experience, age, education and access to cash credit increase the inefficiency level of the farmers. It is however reduced by farmer's access to irrigation facilities, source of farm labour, engagement in off-farm activities and gender. It is recommended that financial institutions and other credit providers should focus on providing credit to the farmers in the form of inputs rather than cash so as to avert the problem of credit diversion into meeting consumption needs. Pepper farmers are also advised by the study to rely more on the services of hired labour rather than family labour since it has proven to be more productive and cost efficient than family labour.}

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\noindent \textbf{Keywords:} Allocative efficiency, determinants, Ghana, resources, southern horticultural belt, stochastic frontier cost function
\index[key]{Allocative efficiency}
\index[key]{Determinants}
\index[key]{Ghana}
\index[key]{Resources}
\index[key]{Southern horticultural belt}
\index[key]{Stochastic!frontier cost function}
\end{document}
