What Drives Smallholders' Productivity in Pakistan's Horticultural Sector?

Smallholders are indispensable to ensuring food security in the developing economies where they farm. Policy interventions often target smallholders to provide for example, input subsidies, extension services and access to credit, because increased total factor productivity (Hsieh & Klenow, 2009) can ensure that they are better placed to support food security. However, the impact of such interventions and the drivers of TFP growth are largely unknown due to lack of comprehensive data and appropriate methodology. To overcome these impediments, we propose an econometric estimation of the components of TFP growth in a Bayesian set-up and apply this to new farm-level survey data of smallholders from Pakistan’s horticulture sector. The results indicate large technical and mix efficiency differentials across agro-climatic zones and farm sizes. These disparities in technical and mix efficiency are due to suboptimal farm practices, potentially from limited access to and adoption of technology. Government policy makers, support agencies, farmer groups and other stakeholders have latitude in providing adequate education and training programs aimed at improving input-use efficiency and introducing innovative practices leading to TFP growth.This report was commisioned by UQ School of Economics. This paper was partially funded by a research grant from the Australian Institute of Business and Economics (AIBE), the University of Queensland, Australia and the Australian Centre for International Agricultural Research for the project ‘Farmer’s capabilities, productivity, and profitability: A case study of smallholders in selected agro zones in Pakistan’(ADP/2015/004