Can Enhancing Efficiency Promote the Economic Viability of Smallholder Farmers? A Case of Sierra Leone

Abstract

By developing meta-frontier efficiency and structural equation models, the paper examines whether farm economic viability is positively associated with technical efficiency in a highly food insecure context, such as that of rural Sierra Leone. The findings show that technical efficiency can be a sufficient but not necessary condition in determining economic viability of smallholder farming. It is possible to breach reproductive thresholds at the cost of reduced technical efficiency, when the crop diversification strategy of smallholders includes market-oriented high-value crops. This calls for a dual policy approach that addresses farmers’ internal needs for self-consumption (increasing efficiency of food crop production) while encouraging market-oriented cash crop production (diversification assisted through the reduction of associated transaction costs and the establishment of accessible commercialization channels of export related crops and/or high-value crops). The work also calls out for a move-up or move-out strategy for small holders to create viable farming systems in developing world.