Drivers of Farm Efficiency and Their Potential for Development in a Changing Agricultural Setting in Kerala, India

Abstract

The agricultural sector is a main source of income for many smallholder farmers in developing countries. In Kerala, the sector faces various challenges linked to land, labour and capital scarcity. This paper explores efficiency levels of farms and identifies measures that increase farm efficiency in a rural region in Kerala. By means of data envelopment analysis (DEA) and subsequent Tobit regression models based on primary data from 333 farms, we show the specific distribution of farm efficiency and explain efficiency differences by various factors relating to socio-economic conditions and farm management. Our analysis finds that average farm efficiency is low. Female farmers, remittances and farm machinery tend to increase farm efficiency, whereas coconut and rice crops as well as fertiliser use tend to decrease efficiency. Our analysis informs the decision-making of farmers and policy-makers, and helps farmers generate marketable surplus that ensures the livelihood of rural communities and drives development.