Fase operativa: Medición

Agricultural productivity may be defined as the index of the ratio of value of total product (output) to that of the value of total resources (inputs) employed in production process. Optimal agricultural resource productivity implies an efficient use of productive resources to attain a given amount of output. The concept of resources productivity analysis is important in agriculture as it:

1. serves as a measure of economic growth,

2. it is a parameter for adjustment of resource use,

3. provide the framework, for which formulation and evaluation of agricultural policies are made,

4. review problem areas that require further investigation.

Since optimal productivity implies efficient use of resources agricultural in this context is synonymous with production efficiency (using most efficient and best technology in reduction process). Attainment of economic growth as achieved when scarce resources are optimally used to the benefit of the society.

3.2 The Concept of Efficiency

The tem efficiency has a wide range of application. Efficiency (also called Pareto-optimality or Pareto efficiency) was named after Vilified Pareto (1848-1923). An economy is said to be pareto-optimal given all parameter if a change in policy that will make one person better off without making some worse off. Giving this condition it means that, production and exchange must be efficient. If otherwise, the need for reallocation of resources will arise. This is to ensure that scarce resources are utilised to produce a different combination of good or there could be reduction of goods among individuals that would improve at least one person’s position without reducing the other person’s utility.

Efficiency is simply concerned with the optimal production and distribution of scarce resources. It is the ratio of total useful output to total input. It is also defined as the minimisation of waste of economic scarce resources in production for the attainment of optimally given level of output. Efficiency can also be viewed as using optimal input combination to attain a given level of output (an input orientation) or attaining optimal output with a combination of a given set of inputs (an input orientation).

Under a given technology, say, output-output model is said to be efficient given that more of one product is combined with less of the other product. Efficiency of production assumes that: marginal rate of transformation of goods A and B most be the same for all firms producing good A and B. This assumption can symbolically be written as:

(i) MRTXYA= MRTXYB

Where x and y represents two products A and B are two firms producing both

(ii) Marginal rate of technical substitution for producing two goods must be the same in production of both. Notationally, this condition can be expressed as:

(MRTSv1v2)X= (MRTSv1v2)y

Where v1 and v2 are the two elements of production X and Y are the two products.

(iii) Marginal rate of transformation of that element into good must be the same for all firms producing these goods and using these elements. This condition can be represented mathematically as:

(MRTv1x)A= (MRTv1x)B

Where v1 is the element of production X is the product

A and B are the two firms.

Where this condition fail to exist, a transfer of some amount of v1 from firm to the other could be necessary to increase the total output of one or both goods. Graphically, the transformation curve (TC) or production possibility curve (PPC) as shown in figure 3.1 can be used to determine maximum efficiency

Y

O X

Figure 3.1: Production Possibility Curve (PPC)

Maximum efficiency is attained at any point on the PPC where allocation of economic resources satisfies the condition of MRTSab^x= MRTSab^y.

3.3 Types of Efficiency

There are different types of efficiency. Some of which include the following:

a. Technical Efficiency

Technical efficiency is the maximum combination of resources (inputs) in production process with a view to attaining a given level of output (an input orientation or obtaining optimal output using a combination of a given set of inputs (an input orientation). It is also maximisation of inputs to produce a given amount of a good or service or maximising output with a given set of inputs.

If a firm in a firm produces maximum output with a given minimum amount of inputs (labour, capital and technology), the firm is said be technically efficient. If otherwise, the firm would be said to be technically inefficient. For example, a maize farmer would be technically inefficient if he employs too many workers than required. A cassava process or may also said to be technically inefficient if spend more resources (overutilisation) and time in producing garri (bye-product) of cassava.

Similarly, a poultry farmer using outdated and upsolate capital, tools and technology is said to be technically inefficient technique implies obtaining maximum physical productfrom a given set of resources, an inefficient technique implies that maximum output cannot be attained with a given set of limited resources (figure 3.2).

Figure 3.2: Technical Efficient and Technical Inefficient Production Technology (Production Frontier Function)

The graphs (Figure 3.2) represents a production frontier function for a combination of variable inputs for the production of a outputs using two production technologies Yp1 in the graph represent on efficient production technology. At that point using production technology (1), 30 units of variable inputs was combined to obtain 70 units of output.

On the other hand, using the same level of variable inputs (i.e. 30 units), only 40 units of output was obtained, employing production technology (2). To produce 40 units of output using production technology (1) will only require combination 10 units of variable inputs against technology (2) that will require a combination of 30 units of variable input. There production technology (1) is technically efficient while production technology (2) is said to be technically inefficient.

Efficient and inefficient production technology can be established if only and if two production technologies employ the use of the same quality, kind and form of input in production process. Otherwise, inefficiency may not exist. If for example in the production process, production technology (1) employed the use of modern (improve) and intricate machinery and production technology (2) could not use such, production technology (2) therefore cannot be said to be technically inefficient. This because the cost of machinery for production

technology (1) might be high enough to outweigh any increase in output of the variable factor.

The concept of technical efficiency is related to productive efficiency.

Productive efficiency means producing at the lowest point on the short run average cost curse. Hence productive efficiency requires technical efficiency. The concept of technical efficiency is also related to x-inefficiency. X-inefficiency occurs when a firm is technically inefficient (i.e. fails to be technical inefficient). Example is a monopoly using inefficient production techniques as a result of no incentives to cut costs.

Technical efficiency is a necessary condition for allocative efficiency to be attained. Nevertheless, allocative efficiency also requires optimal allocation of resources.