The document summarizes a study on maize production efficiency among smallholder farmers in Nepal. The study found the average technical efficiency to be 82% with significant variability. Female farmers and those from lower castes had lower efficiency. Using hybrid seeds, higher soil pH, and greater distance to fertilizer sources were also linked to lower efficiency. The authors recommend extension interventions to promote gender-inclusive and socially-equitable services, hybrid seeds, irrigation, soil testing, and targeted fertilizer subsidies.

1. Asian Maize Conference
Ludhiana, India (8-10 October, 2018)
S. Gautam, N. K. Joshi, D.B. K.C, D. Choudhary, A. Beshir, N. P.
Khnal, H. K. Shrestha
Nepal Seed and Fertilzier Project,
CIMMYT- Nepal
Kathmandu
Technical efficiency of smallholder
maize growers in Nepal and its
implications on extension services

2. • GDP: Fluctuating but positive, 0.6% in 2015; 7.9% in 2016, 6.3% in
(2017), 4.5% in 2018)
• Agriculture contributes around 30% of the GDP (decreasing over
the years) , cereals are important for AgGDP (almost 50%)
Figure: Agriculture Value added per worker (USD) (Source: FAOSTAT)
Figure: Composition of agricultural GDP in Nepal (source: MOAD, 2014)
Economy and Agriculture Sector in Nepal
• Growth rate of Ag-GDP is gradually decreasing over the years
(3% in 2001/2 ; 4.5% in 2010/11; 1% in 2014/15, -0.19% in
2015/16, and rebound to positive in 2016/17)
• Low Agriculture Value added per worker in Nepal

3. Figure: Maize yield in selected countries over past five
decades (Data source: FAOSTAT)
Figure: Paddy yield in selected countries over past five
decades (Data source: FAO STAT)
Productivity of Maize and Paddy historically low with marginal gain in past five decades
AgGDP growth largely depends on
these two crops

4. Why Low productivity??
Crop SSR, 2010 SRR, 2016
Rice 11.38 14.5
Maize 9.03 15.3
Poor Seed Replacement Rate (SSR)
Low fertilizer use (source: FAOSTAT, 2016)
• Poor reach of extension (25% of HHs in reach of
govt. extension and approach traditional,
private sector extension nonexistent
• Poor Infrastructure
Country Road Density (Km
of road per 100 sq
km) of land area
(2006)
Quality of roads (1
low; 7 high): 2006
Nepal 12 2.23
Bangladesh 166 3.1
Pakistan 33.78 3.49
India 111.55 3.22
China 36.02 4.03
Vietnam 48.61 2.45

5. Low mechanization
Low investment
Why Low productivity??

6. - Subsidence production
- Poor gross margin
- Efficiency improvement comes also with better use of
resources, not only more use of resources
- Important to know where are the inefficiencies and
how can the productive resources be better used and
what interventions would help?
Yield, income and use of seed and fertilizer by maize farmers (survey sample)
- Small holdings (no economies of scale) but major crop
for food and nutritional security
- Low / poor input use and low yield

7. Objectives
1. Estimation of Technical Efficiency: A performance indicator for the hhs in maize
production
2. Determinants of technical inefficiency across hhs and make recommendation for
extension intervention
Stochastic Frontier Model is estimated using the Maximum Likelihood method assuming a half-normal
distribution of the inefficiency variance.
ln(𝑦𝑖𝑒𝑙𝑑)𝑖 = α0 + α1 ln 𝑎𝑟𝑒𝑎 𝑖 + α2 𝑙𝑛 𝑠𝑒𝑒𝑑 𝑖 + α3 ln 𝑙𝑎𝑏𝑜𝑟 𝑖 + α5 ln (𝑓𝑒𝑟𝑡)𝑖 + ℰ𝑖 …......(1)
where, ℰi = ( 𝑉𝑖 − 𝑈𝑖 ) where 𝑉𝑖 is a two-sided random error component beyond the control of the
farmer; 𝑈𝑖 is a one-sided inefficiency component.
ln 𝑈 𝑖 = 𝛽0 + 𝛽1 (𝑆𝑒𝑥)𝑖 + 𝛽2 (𝐶𝑎𝑠𝑡𝑒)𝑖 + 𝛽3 (𝑆𝑒𝑒𝑑_𝑇𝑦𝑝𝑒)𝑖 + 𝛽4 (𝐹𝑒𝑟𝑡_𝐷𝑖𝑠𝑡𝑎𝑛𝑐𝑒)𝑖 +
𝛽5 (𝐴𝑔_𝑙𝑖𝑡𝑒𝑟𝑎𝑐𝑦)𝑖 + 𝛽6 (𝑅𝑎𝑖𝑛𝑓𝑎𝑙𝑙_𝑆ℎ𝑜𝑐𝑘)𝑖 + 𝛽7 (𝑆𝑜𝑖𝑙_𝑝𝐻)𝑖 +𝛽8 (𝐴𝑙𝑡𝑖𝑡𝑢𝑑𝑒)𝑖 + e𝑖 ……….…(2)

8. Variable Mean (n=364) Std. Dev
1sr stage: Production function Variables
Yield (MT/ ha) 2.00 1.15
Area (ha) 0.25 0.21
Seed (kg/ha) 37.02 21.62
Fertilizer (kg/ha) 43.73 76.27
Labor (m-days/ ha) 144.57 75.88
Variable Mean (n = 364) Std. Dev.
2nd stage: Inefficiency effect model variables
Distance 2.27 1.58
Soil_pH 6.2 0.43
Rainfall 0.005 0.08
Altitude 972 580
AgLiteracy 15.17 13.54
Sex (dummy) Male: 43%; Female: 57%
Caste (dummy) Upper caste: 46%; Other caste: 54%
Seedtype (dummy) Hybrid: 16%; Non-hybrid: 84%
- Multistage random sampling, 13
districts (6 terai, 7 hills; in western
and central Nepal)
Data: Baseline Survey 2017, NSAF project

9. Results from estimation results of two-stage Stochastic Frontier Analysis model
1st stage results:
• Yield elasticities of all four productive
factors positive and significant
• Mean Technical Efficiency is 82% (Std. Dev.=
15, range: 16% to 100%) with considerable
variability among the maize growing HHs.
• 44% HHs are above average, 34% of the
HHs fall in the third quartile, and 5% of the
households have less than 50% efficiency.
Log Likelihood Ratio -241.83; Prob > χ2
0.0000*** ; Wald χ2 (4): 38.4
*p <0.10, **p <0.05, and ***p <0.01
Note: figures in parentheses are std. errors
Variables
Bootstrap Co-efficient
(std. err. in parentheses)
1st stage: Productive factors
ln Area 0.12** (0.05)
ln Seed 0.14** (0.06)
ln Fertilizer 0.02* (0.01)
ln Labor 0.34*** (0.09)
_cons 5.72*** (0.41)
2nd stage: Inefficiency effects
Sex 0.70** (0.29)
Caste -0.90* (0.48)
Seed Type -28.38*** (9.87)
Distance 0.26** (0.11)
Soil pH 0.24*** (0.08)
Rainfall 9.06** (3.72)
Altitude 0.001 (0.001)
Agricultural Literacy 0.001 (0.02)
_cons -18.10*** (0.02)
Random error
_cons -1.73*** (0.12)
Other statistics

10. Results, Conclusion & Recommendation for extension intervention
Results in conformity to study in Ghana
(Bempomaa and Acquah, 2014) but
contrary to study in Zimbabwe (Mango et
al., 2015).
Caste/ethnic identity affects the degree
to which rural women benefit from
development activities (Bennett,
2005).
Other caste
Bramhin/ Chettry
Higher TE
Lower TE

11. Results, Conclusion & Recommendation for extension intervention
Gender and socially inclusive extension
- Feminization of agriculture post-2000
Women friendly mechanization
Customized ICT tools
(85% hhs with mobile/ smart phones)
On site trainings, simple materials, female
trainers
Nutritionally enriched maize (QPM/ vitamin
enriched varieties)

12. Results, Conclusion & Recommendation for extension intervention
Hybrid seed (2.87 mt/ha) Non-hybrid seed (1.84 mt/ ha)
Lower TEHigher TE
75% hybrid users from terai (closer
to market and agro-vets)
- Applied more fertilizer (7 kg
more per hectare)
- 80% of the non-hybrid users did
not purchase seed
Seed value chain intervention
- Also think beyond breeding: exploit the current yield gap (deploy existing promising
varieties)
- Improve seed replacement rate (less than 15%)
- Seed Subsidy: Focus on new varieties, low cost hybrids
PPP in R&D and extension:
- Seed companies at nascent stage (more like distributors), capacity
development of private sector

13. Results, Conclusion & Recommendation for extension intervention
Rainfall shock ( -ve elasticity)
- Irrigation is a problem for maize growers in Nepal
given maize is mostly produced as rain fed crop
- Rainfall variability is increasingly becoming a
issue in
- Climate change is global issue but need locally
adaptable solutions
- Invest in irrigation in dry maize areas
- Promote stress tolerant varieties in hot spots
- Focus intervention in new irrigated area with hybrids.
- Government co-ordination (land reform, irrigation,
agriculture are 3 different ministries)
Finding in line with (Koo and Cox, 2014;
Amare et al., 2018): rainfall shocks/ variability
tend to decrease productivity of maize.

14. Results, Conclusion & Recommendation for extension intervention
Extension: Soil testing, mapping, domain specific
fertilizer recommendation, use of fertilizer blends,
ISFM literacy
Soil pH - For sample HHs: pH range is 5.7 and 7.3 ; mean of 6.2
- 17% of the households were in areas with pH above 6.5.
- Ideal pH for maize: 5.5 to 6.5 (varies on other soil
characteristics as well)
- High soil pH restricts use and availability of iron (leading to iron chlorosis), most
micronutrients, and phosphorus becomes unavailable to plants at high pH. (Adeoye and
Agboola, 1985/ Mallarino et al., 2011)
Policy:
Domain specific fertilizer
recommendation
- Use of blended fertilizers to
address domain/ crop specific
needs
Higher pH, Lower TE
Govt. recommendation:
120:60:40 kg NPK

15. Results, Conclusion & Recommendation for extension intervention
Distance to point of fertilizer purchase ( more distance, less efficiency)
- Fertilizer shortage common in Nepal during
critical stages of crop growth.
- Distance potentially limits purchase/ application
of fertilizer – lower yield – low efficiency ?
Policy options (but fertilizer is politically sensitive)
- Allocate subsidy for special blends of fertilizer (eg. DAP with Zinc; Sulphur coated urea,
polymer coated urea)
- Reduce price subsidy for urea and shift to DAP (for balanced application of fertilizer)
- Reduce per kg subsidy and but increase the quantity of fertilizer import
- Target subsidy to small holders (voucher system)
• US$900 Million
• Not financially viable

16. Thank You
Acknowledgment:
The data used in this presentation was
collected by United States Agency for
International Development (USAID) funded
Feed the Future’s Nepal Seed and Fertilizer
project. The contents of this technical paper are
the responsibility of the authors and do not
necessarily reflect the views of USAID or the
United States Government.