  The rate at which interstellar gas is converted into stars, and its
dependence on environment, is one of the pillars on which our understanding of
the visible Universe is build. We present a comparison of the surface density
of young stars (Sigma_*) and dust surface density (Sigma_d) across NGC346 (N66)
in 115 independent pixels of 6x6 pc^2. We find a correlation between Sigma_*
and Sigma_d with a considerable scatter. A power law fit to the data yields a
steep relation with an exponent of 2.6+-0.2. We convert Sigma_d to gas surface
density (Sigma_g) and Sigma_* to star formation rate (SFR) surface densities
(Sigma_SFR), using simple assumptions for the gas-to-dust mass ratio and the
duration of star formation. The derived total SFR (4+-1 10^-3 M_sun/yr) is
consistent with SFR estimated from the Ha emission integrated over the Ha
nebula. On small scales the Sigma_SFR derived using Ha systematically
underestimates the count-based Sigma_SFR, by up to a factor of 10. This is due
to ionizing photons escaping the area, where the stars are counted. We find
that individual 36 pc^2 pixels fall systematically above integrated
disc-galaxies in the Schmidt-Kennicutt diagram by on average a factor of ~7.
The NGC346 average SFR over a larger area (90 pc radius) lies closer to the
relation but remains high by a factor of ~3. The fraction of the total mass
(gas plus young stars) locked in young stars is systematically high (~10 per
cent) within the central 15 pc and systematically lower outside (2 per cent),
which we interpret as variations in star formation efficiency. The inner 15 pc
is dominated by young stars belonging to a centrally condensed cluster, while
the outer parts are dominated by a dispersed population. Therefore, the
observed trend could reflect a change of star formation efficiency between
clustered and non-clustered star-formation.
