Assessment of Profit Efficiency for Spinach Production under Small-Scale Irrigated Agriculture in the Eastern Cape Province, South Africa

Abstract

Improving profit efficiency in vegetable farming, especially for Spinach, is vital in enhancing income, livelihoods, and nutrition security and reducing the poverty of smallholder farmers, particularly in developing countries like South Africa. Despite the country’s potential, spinach production faces major challenges, including unreliable markets, low adoption of modern production systems, and production inefficiencies that affect farm returns. This has been attributed to a lack of adequate and reliable information to guide producers on measures for improving productivity through cost effective production systems and efficient market systems, eventually leading to profit inefficiency. Therefore, this study sought to assess the profit efficiency of smallholder spinach producers under irrigated agriculture in the Eastern Cape Province, South Africa. The study made use of multi-stratified sampling procedures to select 150 spinach producers under irrigation. The stochastic profit frontier function was applied to assess the profit efficiency of smallholder spinach farmers. The results indicated that most farmers operated in farm sizes of 3 ha with an average age of 48 years. The estimates of the stochastic profit frontier function showed that farm size, cost of fertilizer, seed, and pesticides increased profit while labour used decreased profit. Findings indicated a 10% profit loss due to a mixture of technical and allocative inefficiency in the production of spinach, while farmers were able to attain an average profit inefficiency of 90%. Moreover, findings revealed numerous factors that positively affected the profit efficiency of spinach farmers, including socioeconomic, institutional, and cultural. The study findings imply that profit efficiency can increase significantly through the use of high-quality fertilizer, seeds, and pesticides. The allocative efficiency results indicate that improvement in access to extension services, farmers’ level of education, and farm experience can result in the increased allocative efficiency of spinach farmers in the study site. The study further suggests that smallholder farmers must adopt innovative technology to enhance their agricultural productivity, and this is likely to improve household income and nutrition security. Thus, the study recommends that policymakers and government must invest in farmers’ education through effective extension delivery programs and the provision of credit to help farmers increase their profit efficiency.