The groundnut sector has not shown significant growth in terms of production and
productivity in Zambia. One of the central problems of groundnut production is low yield
per unit area. This study analysed profit efficiency and determinants of groundnut
production, in the context of profit maximization, as an incentive for optimum production
among smallholder groundnut farmers in Eastern Province. Data for 1,232 farm households
from Central Statistical Office of Zambia was used in this analysis. The stochastic frontier
approach with the application of a flexible translog profit function and an inefficiency
model were used in estimating the profit efficiency.
The results showed existence of high level of inefficiency in groundnut farming because
the gamma ratio was comparatively large (γ = 0.6445). Seed price and value of fixed capital
were significant in the profit function. The profit efficiencies varied widely between 9.50%
and 92.38%. On average, farmers realized 72.50% of their frontier profit, with an estimated
27.50% of the profit lost due to technical and allocative inefficiencies. Education level,
credit access, land tenure, distance to market, availability of storage facilities and weeding
duration were significant factors influencing profit efficiency.