Measuring Farm-level Technical Efficiency of Urban Agriculture in Tanzanian Towns: The Policy Implications

Abstract

Technical Efficiency Indices of Urban Agriculture (UA) were determined using the stochastic frontier production function which incorporates a model of technical inefficiency effects. In 2010, farm-level data of 270 urban agriculture farmers in Tanzanian urban wards of towns of Arusha, Dar es Salaam and Dodoma was obtained using semi-structured questionnaires. The parameters were estimated simultaneously with those of the model of inefficiency effects. Using the maximum likelihood estimation technique, asymptotic parameter estimates were evaluated to describe efficiency determinants. Study results revealed that a mean technical efficiency index (TEI) of 0.72 was achieved implying that output from urban agriculture production could be increased by 28% using available technologies. Despite of urban farmers having entrepreneurial acumen, they faced several challenges in resource allocation. Land size, total variable costs, and extension service charges negatively impacted on TEI. The study recommends that the government using urban agriculture and livestock extension agents should explore profitable levels for promoting UA enterprises to ascertain profitable TEI levels and UA units.