Agricultural Productivity, Efficiency and Growth in Botswana

Abstract

Agriculture plays an important role in Botswana, providing food, income, employment and investment opportunities for the majority of the rural population. However, over the last two decades, the contribution of agriculture to the economy and rural development has declined leading to a progressive increase in food imports. Low growth in the agricultural sector has been attributed to low productivity, which could be attributed to the recurring drought conditions that prevail in many parts of the country, and partly by the small scale of farms. Remarkably, this decline in agricultural performance in Botswana has coincided with a period of major policy reform, the objective of which is to improve agricultural performance. This study measures the performance of the agricultural sector and investigates the reasons for continuing decline in spite of considerable public expenditure. Using panel data from 1979 to 2012, the study calculates various indicators to assess the different drivers of the performance of the sector across different agricultural districts, agro-ecological regions, production systems and sub-sectors. A nonparametric approach is employed to examine trends in agricultural productivity in six regions of Botswana. Measures of total factor productivity (TFP) are obtained and decomposed into various sources including efficiency change (technical, scale and mix efficiency) and technical change. The results show that TFP declined due to a fall in overall efficiency at 3.1 per cent per annum. Moreover, a parametric stochastic distance frontier approach is used to examine sources of efficiency, productivity and output growth and the possible reasons for the decline in productivity. It was found that the main driver of productivity is improvement in technical efficiency. The results show that various programs introduced during the study period did not lead to any improvement in productive efficiency. Results from both parametric and nonparametric approaches indicate that overall efficiency varies from region to region, which suggest that there is a scope for improving productivity by taking a differential regional approach to efforts aimed at increasing efficiency.