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The Levels and Determinants of Profit Efficiency in Fodder Production: A Case of Southern Rangelands of Kenya

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  • Manyeki John Kibara

    (Kenya Agricultural and Livestock Research Organization, Kiboko, P.O. Box 12-90138, Makindu, Kenya)

  • Kuria Simon

    (Kenya Agricultural and Livestock Research Organization, Kiboko, P.O. Box 12-90138, Makindu, Kenya)

  • Rono Julius

    (SNV Netherlands Development Organization, P.O. Box 30776, Ngong Ln off Ngong Road, Nairobi, Kenya)

  • Mulei Benson

    (Kenya Agricultural and Livestock Research Organization, Kiboko, P.O. Box 12-90138, Makindu, Kenya)

Abstract

This study examines the profit efficiency and the responsible factors for inefficiency in the selected forage production in selected areas of Kenya by using the maximum likelihood stochastic profit frontier function. This study proves that forage production is profitable with an average profit efficiency being 76.22% and 86.57% for the entire sampled population for grasses and leguminous crops, respectively. The result of the coefficients reveals some variability, which confirms that the firms in the sample have different profit frontiers. For coefficients that are significant but heavily negative in terms of magnitude is a clear indication that such variables would result in a high decrease in return to scare with respect to profit margin and vice versa. The policy implication in forage production based on these findings is that profit inefficiency can be reduced significantly by improving the cost of land preparation, land harrowing, cost of planting materials, and weed management, although other costs evaluated are also relevant.

Suggested Citation

  • Manyeki John Kibara & Kuria Simon & Rono Julius & Mulei Benson, 2024. "The Levels and Determinants of Profit Efficiency in Fodder Production: A Case of Southern Rangelands of Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 2405-2414, March.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:3:p:2405-2414
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    References listed on IDEAS

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    1. Rahman, Sanzidur, 2003. "Profit efficiency among Bangladeshi rice farmers," Food Policy, Elsevier, vol. 28(5-6), pages 487-503.
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    3. Adeleke Oluwole Salami & Abdul Kamara & Zuzana Brixiova, 2010. "Working Paper 105 - Smallholder Agriculture in East Africa: Trends, Constraints and Opportunities," Working Paper Series 242, African Development Bank.
    4. John Kibara Manyeki & Balázs Kotosz, 2019. "Efficiency estimation and its role in policy recommendations: An application to the Kenyan livestock sector," Regional Science Policy & Practice, Wiley Blackwell, vol. 11(2), pages 367-381, June.
    5. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    6. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    7. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
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