A data envelopment analysis of a sample of 76 Nepalese rice farmers reveals average relative economic, allocative, technical, pure technical and scale inefficiencies as 34, 13, 24, 18 and 7 per cent, respectively. The significant variations in the level of inefficiency across sample farms are attributed to the variations in the 'use intensities' of resources such as seed, labour, fertilisers and mechanical power. In addition, a second stage Tobit regression shows the variation is also related to farm-specific attributes such as the farmers' level of risk attitude, the farm manager's gender, age, education and family labour endowment. Based on the empirical findings, policy implications and development strategies for improving efficiency of Nepalese rice farms are briefly discussed.

Achieving an appropriate resource allocation structure usually revolves around the farm manager. His or her ability is crucial to success. Yet, most farmers learn by experience andlor through various courses that concentrate on technical, production economic and related aspects. Putting more effort into understanding the components of managerial ability and how a managers' ability to perform well in each component might be improved is well overdue. As psychology is the study of people and their actions it is the obvious discipline to turn to for assistance. This paper contains a review of the psychology of decision making from a farm management perspective, outlines what psychology offers for changing a person's attributes. and considers the structure of a research programme aimed at developing methods for improving individual's managerial ability. 0 2001 Elsevier Science B.V. All rights reserved.

The efficiency of production from a farm's land, labour and capital is critically dependent on the ability of the farm manager. Yet, while there are studies correlating a wide range of manager-related variables with returns, and, therefore, probably ability, little understanding of the basic determinants of managerial ability exists. Questions such as 'what is the importance of a farmer's family experiences and training in determining the farmer's managerial ability?' need answering. The solution to this, and other, questions will enable determining ways of improving farmers' inherent ability developed both in early, and later, life. In that most decisions on a farm are made intuitively, in contrast to the use of a formal analysis, improving farmers' inherent ability will have a significant payoff. The research reported here uses data from a large stratified random survey of 740 developed farmers (29 per cent had tertiary education, 30 per cent had 4 or more years secondary education) to create a structural equation model of the determinants of managerial ability. The results suggest that a farmer's exposure to experiences is a significant factor in ability, as is the farmer's management style and the family influence on early life experience.

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