Profit analysis of small-scale maize farmers: a case study in the Brong Ahafo region in Ghana, West Africa

The importance of small-scale maize cultivation to the Ghanaian economy cannot be overemphasized especially in an era where issues of global food security and sustainability are the topmost priorities in developing economies, however, little is known about their profit efficiencies and whatsoever determinants it. This study guided by the above questions adopts the stochastic frontier efficiency approach assuming a Cobb Douglas form. A crosssectional data of 300 small scale maize farmers were obtained by means of structured questionnaires across selected districts in the Brong Ahafo Region. Frontier 4.1 and STATA 14.0 provides the maximum likelihood estimates of the stochastic profit frontier model. Estimated gamma value (γ) which measures the level of inefficiency was 0.73, indicating 73% variation in maize profit was due to inefficiency in input use and other farm practices, while 27% of profit deviations from the frontier output came from random factors. Further, empirical results show that farmers in the region had an average profit efficiency of 58%, with estimated minimum and maximum profit efficiency of 19% and 83% respectively. This implies that the average maize farmer in the study area gets a nominal profit of about 58% from their potential output given the current technology available. Practically, it suggests that there is an opportunity to increase profit by 42%. The inefficiency model established that access to credit, farmer education, experience, household size, access to extension and membership of farmer groups increases farmers' profit efficiency, while gender, age, and land tenure system reduce their profit efficiencies.