Abstract
Enhancing profit efficiency in vegetable farming is important to increase income, livelihoods, and nutrition security, and to reduce poverty of smallholder farmers, particularly in developing countries. This study examined the profit efficiency and its determinants in smallholder vegetable farms in Nepal using the stochastic translog profit function with cross-section data collected in 2013. The results revealed a high level of inefficiency in vegetable farms because of the combined effects of technical, allocative, and scale inefficiencies. The profitability differential in vegetable farms is significantly explained by input variables, namely, labor, land, seeds, fertilizer, pesticides, and capital. The determinants of profit inefficiency in vegetable farming were the types of crop varieties, access to information and extension services, access to agricultural credit, distance of farms to markets, and sex of farm manager. The profit efficiency in vegetable farming can be enhanced by adopting improved seed varieties, improving effective information and extension programs, increasing accessibility of credit facilities to the farmers, developing market infrastructure, and empowering women farmers in vegetable farming that leads to improve household income and nutrition security.
Highlights
Vegetable farming is an important sub-sector to increase income, reduce poverty, and improve nutrition, in the developing countries
Nepalese economy has long been relying on agriculture, which shares more than 25% of the gross domestic product (GDP) where vegetable is one of the major components in contributing to the Agriculture Gross Domestic Product (AGDP)
Despite the huge contribution to the AGDP, the growth rate of this sector has decreased from 5.98% (2007–2009) to 3.07% (2010–2019), and the productivity remains low (MOALD, 2020), which is lowest in Asian countries (Rai et al, 2019)
Summary
Vegetable farming is an important sub-sector to increase income, reduce poverty, and improve nutrition, in the developing countries. This sector provides greater opportunities for self-employment to different actors of the food value chain such as input suppliers, farmers, traders, transporters, processors, and other supportive line agencies. Nepalese economy has long been relying on agriculture, which shares more than 25% of the gross domestic product (GDP) where vegetable is one of the major components in contributing to the Agriculture Gross Domestic Product (AGDP). Despite the huge contribution to the AGDP, the growth rate of this sector has decreased from 5.98% (2007–2009) to 3.07% (2010–2019), and the productivity remains low (MOALD, 2020), which is lowest in Asian countries (Rai et al, 2019). Enhancing productivity is crucial to narrow down the productivity gap (productivity potential 7 tons/acre) and eventually improve the technical, allocative, and economic efficiencies in vegetable production
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