Adoption of Improved Technology and Farm Level Technical Efficiency of Small-Scale Oil Palm Producers in the Western Region of Ghana

Abstract

Over the last 60 years, a series of interventions geared towards increasing oil palm output have been initiated by the Government. Recent major Government interventions are the expansion of the seednuts production capacity of the Oil Palm Research Institute (OPRI) from 2 million to 5 million seednuts per year, the President‟s Special Initiative on Oil Palm and the Oil Palm Master Plan. The oil palm sector is dominated by small-scale producers who have low productivity as a result of using traditional technology, having inadequate extension service, and low application of vital inputs. Small-scale producers comprise of smallholder, out-grower and independent smallholders. This study examined the adoption, productivity and technical efficiency level of small-scale oil palm producers in the Western Region of Ghana. Primary data was collected using a set of structured questionnaire from two hundred and fifty (250) small-scale producers. The Poisson regression was used to examine the factors that influence adoption, whilst the stochastic production frontier was used to analyse productivity and technical efficiency. Results reveal that oil palm productivity increases with intensity of improved oil palm technologies adopted. Factors that positively influence adoption were farmers‟ contact with extension, hired labour, type of small-scale producer and access to credit. The results also show that the smallholder producers, who produce under the management of oil palm companies, are more productive than the independent producers. On average the estimated yield of the independent producers 6.8mt/ha, was almost three times lower than smallholder producers (16.7mt/ha). All explanatory variables for the production function estimation were positively related to output except for age of the tree. Oil palm production exhibited increasing returns to scale in the study area. The mean technical efficiencies for independent and smallholder producers were 0.62 and 0.91, respectively. The study concludes that smallholder producers are more productive and technically efficient compared with independent producers. The study recommends that Government and stakeholders improve labour training and extension services for independent producers. Furthermore, independent producers are encouraged to become smallholders under the supervision of the plantations.