ANALYSIS OF PROFIT EFFICIENCY OF SMALLHOLDER COMMON BEAN FARMERS IN MALAWI

Common bean is regarded as one of the most valuable leguminous crops in Malawi because of its
nutritional value, ability to improve soil fertility and low production cost. Despite this, the crop is
produced in less quantity than what is required due to small profits that farmers obtain from the
enterprise. The study analyzed profit efficiency and its determinants for Common Bean
smallholder farmers in Malawi by employing Cobb Douglas stochastic frontier model. A Sample
of 1,969 common bean farmers was used in the study which was collected across Malawi by the
National Statistical Office (NSO) in the year 2016/2017 (IHS4 data). The study found out that
there exist profit in-efficiency in Common Bean production with a gamma value of 66 percent.
The profit efficiency among Common Bean farmers ranged from 17 to 98 percent with an average
of 44 percent indicating that there is still a potential to increase profit efficiency by 56%. Among
the factors hypothesized to affect profit efficiency, age of a farmer, marital status, off-farm income,
use of extension advice, adoption of agroforestry practices, access to credit, subsidy coupons and
use of terraces to control soil erosion were to found significantly improve profit efficiency. The
study further looked at regional profit efficiency differences and found out that farmers from
Central region of Malawi had the lowest average profit efficiency while those from the southern
region had more profit efficiency. The study recommends increasing input use and also improving on the factors that increased profit efficiency in order to improve profit efficiency.