The efficiency illusion of gross margin analysis: A case for value added comparison

Abstract

One of the issues that should guide agricultural planners in the formulation of policies is efficiency measurement. Policies that centre on the efficient use of resources will aid the achievement of a rapid agricultural development. Planners usually adopt the price or allocative efficiency and technical efficiency as criteria for choosing between projects and policies. Price efficiency is based on a measure of marginal product and the opportunity cost. A resource is efficiently utilised if its marginal value product is equal to its marginal factor cost.