Analysis of Economic Efficiency and Farm Size: A Case Study of Wheat Farmers in Nakuru District, Kenya

Abstract

The primary objective of this study is to examine the effect of farm size on economic efficiency among wheat producers and to suggest ways to improve wheat production in the country. Specifically, the study attempts to estimate the levels of technical, allocative, and economic efficiencies among the sampled 130 large and small scale wheat producers in Nakuru District. The social-economic factors that influence economic efficiency in wheat production have also been determined. Results indicate that the mean technical, allocative, and economic efficiency indices of small scale wheat farmers are 85%, 96%, and 84%, respectively. The corresponding figures for the large scale farmers are 91%, 94%, and 88%, respectively. The number of years of school a farmer has had in formal education, distance to extension advice, and the size of the farm have strong influence on the efficiency levels. The relatively high levels of technical efficiency among the small scale farmers defy the notion that wheat can only be efficiently produced by the large scale farmers.