The Role of Institutional Environments on Technical Efficiency: A Comparative Stochastic Frontier Analysis of Cotton Farmers in Benin, Burkina Faso, and Mali

This paper examines the role of institutional environments on cotton farmer technical efficiency scores in Benin, Burkina Faso, and Mali using a stochastic frontier production approach. First, the key institutional changes that have occurred with the recent market-oriented reforms are discussed. Then, farm efficiency per country is measured using cross-sectional data collected by the Cotton Sector Reform Project of the Africa, Power, and Politics Programme in 2009. Results from a one-stage estimation procedure suggest that while no technical inefficiency exists in Benin, an average technical efficiency of 69% and 46% is found in Burkina Faso and Mali, respectively. Agricultural development policies focusing on reducing the inefficiency at the farm level in Mali and Burkina Faso should be adopted; whereas policies designed to shift outward the production frontier seem more appropriate in Benin. Interestingly, institutional environment factors explaining variations in efficiency scores differ across countries. In Mali, farms that are food secure and that cultivate more hectares of cereals are more technically efficient in producing cotton. In contrast, Burkinabe farmers who are dissatisfied with the management of their producer organizations are more technically efficient. To be successful, efforts to promote efficiency would have to work in concert with the local realities in each country