Analysis of economic efficiency of small-scale onion production in volcanic highlands in rwanda

Abstract

Onion is recognized for its nutritional value, its curative capacities and its fitness to flavor diets. This article attempted to assess the economic efficiency of input combinations among onion farmers in the Volcanic Highlands in Rwanda. Data were collected using a questionnaire administered to a random sample of 94 small-scale onion producers. Cobb-Douglas type stochastic frontier functions were specified and estimated using maximum likelihood method to estimate technical, allocative, and economic efficiencies of onion production. A simultaneous-equations model was specified and estimated with seemingly unrelated regression method to identify the sources of technical, allocative, and economic efficiencies. Results from econometric estimations revealed that seeds and organic fertilizers are the most influential determinants of onion production, and showed that the total production cost increases with an increase in onion output. The sum of input coefficients of 1.03 (greater than 1) indicates that onion production scores the increasing returns to scale in the study area. The results also pointed to the significant effect of education and household size on farm efficiencies. Finally, the study suggests the enhancement of farmer’s professional trainings and the re-adaptation of extension services to the farmers’ needs so as to achieve the optimal use of resources.