Farm productivity under financial constraints in developing countries: evidence from maize smallholder farmers in Burkina Faso

Abstract

In this paper, we apply an indirect production function approach to analyze producers' output and input allocation choices under expenditure constraints. Our estimation results show that financial constraints induced a nonoptimal usage of smallholder farm inputs, resulting in losses in potential productivity of approximately 25%. It appears that the presence of a binding expenditure constraint has led to an underutilization of fertilizer and manure as well as an overutilization of seed.