Economic Efficiency of Smallholder Farmers in Maize Production in Gudeya Bila District, Oromia National Regional State, Ethiopia: Parametric Approach

Abstract

Agriculture in Ethiopia is characterized with low productivity. To improve this problem either introduction of modern technologies or improving the efficiency of farmers is an important. Improving efficiency of the farmer has received the greatest attention as it is more cost effective than introducing new technologies. The aim of this study was to analyze levels of technical (TE), allocative (AE) and economic efficiency (EE) of smallholder farmers and factor affecting efficiency levels of farmers in maize production in the study area. To meet the stated objectives primary data were collected using structured questionnaires from 154 randomly selected sample households during the 2017/18 production year. Stochastic production frontier model was used to estimate technical, allocative and economic efficiency level where as Tobit model was used to identify factors affecting efficiency level. The mean technical, allocative, economic efficiency were 71.65%, 70.06% and 49.89%, respectively. Thus the results reveal that exist considerable levels of inefficiencies in maize production in study area. The Tobit model results revealed that education levels, family size, farm size, frequency of extension contact, uses of credit and participation in off/non-farm activities had a significant positive effect on technical efficiency. Livestock holding and participation in off/non-farm activities had positive effect and distance of maize plot from home were found to had negative effect on allocative efficiency while education levels, family size, uses of credit, extension contact and participation in off/non-farm activities were found to had positive effect and distance of maize plot from home is negative influence on economic efficiency. The result indicated that there exists a room to increase the efficiency of maize producers in the study area. For realizing significant economic efficiency gains policies and strategies of the government should be directed towards increasing farmer’s education and livestock holding, promoting off/non-farm activities, facilitating credit and extension service.