A mathematical programming model for farm household evaluation: economic efficiency analysis of farms under risk and uncertainty in Mozambique

Abstract

Farmers in Mozambique produce under a relatively high degree of risk and uncertainty for their scale of activity. They have low yields, and their production barely meets subsistence requirements. Increased farm production is seen as an important goal for securing food supplies. This study evaluates allocation of household resources, analyzes agricultural techniques adopted by farmers of Xai- Xai, searches for alternative solutions to food insecurity, and develops a mathematical programming model for farm household evaluation. A survey of 110 households was done in Xai-Xai in 1992, data were collected on production techniques, input use, production constraints, household consumption, and market prices. The farm household model was tested and simulations of price changes were done to evaluate, ex-ante, their impact on farm households. The solutions of the model were consistent with prevailing production cropping systems in Xai-Xai. The results of the survey indicate that the major problems faced by the households in Xai-Xai are drought, famine, lack of farm credit, schools and hospitals. Their objective function includes food security and optimization of net incomes . Due to a high yield variability of new varieties of maize and peanuts, irregular supply of fertilizer and pesticides at affordable prices, farmers prefer to continue growing low risk varieties to assure minimum food requirements. Unfortunately those varieties have low yields and cannot provide sufficient food to cope with increasing population. Price adjustments are not sufficient to achieve a sustained supply response from a large and growing number of poor households. Price increases result in a change of crop composition rather than an overall increase in output. Poor farmers lose access to inputs and new technologies, and they will tend to increase the area for subsistence crops. These findings suggest that future programs must be targeted to reduce risk and uncertainties in agriculture, provide alternative sources of farm credit, and promote educational opportunities along with extension services.