Factors affecting cocoa productivity among the smallholders in West Malaysia

Abstract

The principal objectives of this study are to identify the production factors that influence cocoa productivity at the smallholder's level and to examine resource allocation and technical efficiency in cocoa production. Cross-sectional data collected from 260 cocoa smallholders were used for the study. Both the average production function estimated by the Ordinary Least Squares techniques and the frontier production function estimated by the Linear Programming methodology were employed in the analysis. The results indicated that the input factors which had a significant impact on the production of cocoa were land size, labour, living capital, farm implements and fertilisers. Among the management proxies, only farmer's age, extension contact, farmer's education and the practice of keeping farm records and accounts were important. The data presented in this study 1end support to the hypothesis that the cocoa smallholders were highly inefficient allocatively. Inputs comprising land, fertilisers, and farm implements were underused while labour and living capital were overused. Technical inefficiencies were also present in the study area. The study revealed that a large proportion of the farmers have output levels below their potential. Output could be increased between 18 to 52 per cent if all the least efficient farmers attained those levels of technical efficiency that were achieved by the best farmers in the sample. The variations in technical efficiency in this area were explained by differences in land size, farmer's educational level, their age and the practice of keeping farm records and accounts. This study emphasises the need that increasing efforts must be directed at the least efficient farmers through better and effective management practices and better organization of farm activity without major new investments, at least in the short-run.