Sources of small family farm production inefficiency, recôncavo region, Bahia, Brazil

Abstract

The main objective of this study was to identify and analyze the sources of inefficiency in family operated small agricultural properties in the Brazilian state of Bahia’s Recôncavo region from a sample of 44 producers. A non-parametric approach, in the context of cost minimizing behavior under constant returns to scale, was used to estimate the indices of technical, scale, allocative, and total (economic or cost) efficiency. Results indicated that the largest source small family farm inefficiency in the Recôncavo region is allocative inefficiency, that is to say, the non-observance of price relationships when making production decisions. On the average, 79.1% of these farms’ total inefficiency is due to allocative inefficiency, 9.3% to technical inefficiency, and 11.7% to scale inefficiency