Abstract
The study measured the extents and principal determinants of productivity and technical efficiency of resettled farm households in Western Ethiopia using 2016 survey using stochastic frontier analysis (SFA) and data envelopment approach (DEA). Multi-stage sampling technique was used to collect data of 285 resettled farm households. Stochastic frontier approach showed that land, labor, local seed, oxen, improved seed and manure having enhanced effect on resettled farmers’ productivity. The mean technical efficiency is found as 0.738 and hence forgone an income of 8,746.53 Birr due to their inefficiency. The mean scale efficiency was found to be 89 %. This reveals an increasing returns to scale nature of production technology. Spearman’s correlation test revealed a significant agreement between SFA and DEA estimation. Tobit model revealed that livestock size, land fragmentation, crop diversification, technology adoption and sharecropping as having significant effect on TE. Therefore, the study recommends government and other concerned bodies to enhance local best farming practices, timely supply of improved inputs in fair price, strengthening mixed farming system, providing trainings and education, encouraging crop diversification, consolidating farm plots, encouraging soil management practices, strengthening tenancy security and providing appropriate health services that lead to boost their food security. Keywords: DEA, Resettled Farm Households, Productivity, SFA, Technical Efficiency, Ethiopia DOI : 10.7176/JESD/10-7-10 Publication date : April 30 th 2019
Highlights
Two-thirds of the population of Sub-Saharan Africa live in rural areas and nearly half of this is smallholder farmers with the contribution of more than one-third of the GDP, employs more than two-thirds of the labor force, and generates major foreign exchange earnings
Www.iiste.org ln: it refers to the natural logarithm, (Output)i: it refers to the total value of crop outputs produced by the ith farm household in the study area for 2016 production season in Birr, β0: it refers to the constant term, β : it refers to a vector of j unknown parameters to be estimated by maximum likelihood estimation (MLE) method, Xj: it refers to the vector of inputs of ith the farm household, and vi – ui: it refers to a two-component error term which captures the deviation of the observed crop output from its corresponding frontier output of ith farm household attributed to the effect of random shocks and technical inefficiency, respectively
Θi: it refers to the technical efficiency score of the ith decision making units (DMUs), N1′ = 1 ∶ it refers to a convexity constraint which ensures that technically inefficient farm household is only benchmarked against farm household of a similar size, N1: it refers to an N x 1 vector of ones, Y: it refers to the output matrix for the farm households, yi: it refers to the total value of output of ith DMU in Birr, X: it refers to the input matrix for the farm households, xi: it refers to the vector of convectional inputs, and λ: it refers to a Nx1 constants
Summary
Two-thirds of the population of Sub-Saharan Africa live in rural areas and nearly half of this is smallholder farmers with the contribution of more than one-third of the GDP, employs more than two-thirds of the labor force, and generates major foreign exchange earnings. Technical efficiency measures the relative ability of the farm households to obtain the maximum frontier output from given set of inputs or to minimize the cost of production at the given level of output and production technology. (Output)i: it refers to the total value of crop outputs produced by the ith farm household in the study area for 2016 production season in Birr, β0: it refers to the constant term (intercept), β : it refers to a vector of j unknown parameters to be estimated by MLE method, Xj: it refers to the vector of inputs of ith the farm household, and vi – ui: it refers to a two-component error term which captures the deviation of the observed crop output from its corresponding frontier output of ith farm household attributed to the effect of random shocks and technical inefficiency, respectively
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