Abstract
The objective of this study is to review economic efficiency of smallholder farmers in sesame production in Ethiopia. Specifically, the review examines levels of Technical, Allocative and Economic efficiencies of sesame producer; and to review factors affecting efficiency of smallholder farmers in the study area. For this study both published and unpublished sources were used. Also, the study reviewed various functional forms that were fitted to estimate Technical, Allocative and Economic efficiencies levels and model that were fitted to estimate factor affecting efficiency of smallholder farmers. The review results indicate Cob-Douglas function and Translog functional form are alternative methods for evaluating efficiencies and were used for purposes of comparison; OLS is mainly used if the inefficiency scores are not truncated or censored for a specific value; Tobit regression approach is preferred over the OLS regression in the case of censored data. The review results indicate as there is a room to increase the efficiency of sesame producers. Variables such as non-farm income and credit access, experience in sesame production, distance of sesame farm from residence, education level and extension contact had major significant impact on Technical, Allocative and Economic efficiency. In order to improve efficiency of smallholder farmers in sesame production in Ethiopia, give consideration to the above mentioned socio economic and institutional factors is needed. Focusing on efficient use of existing resources and addressing the socio-economic and institutional factors by using existing technology and given input levels are crucial and relevant policy issues are recommended. Strengthening the existing livestock production system, credit access, agricultural extension system and invest in the provision of basic education to smallholder farmers are advisable.
Highlights
Economic Efficiency According to Barros, technical efficiency refers to the ability of a hotel to obtain maximal output from a given set of inputs with reference to a production function, while allocative efficiency refers to the ability of a hotel to use the inputs and outputs in optimal proportions, given their respective prices
The study results indicate there is inefficiency in sesame producer in the study area. [27]
The diversified agro-ecology, Land suitability, Sesame market demand, high labor source, Water availability for irrigation in Ethiopia is suitable for sesame production
Summary
The world population is 7.7 billion in year of 2017; Out of this 80% of the world's poor, live in rural areas and work mainly in farming. Sesame is one of the key agricultural commodities grown in Ethiopia, and the most significant contributor to national economy It is second largest foreign exchange earnings next to coffee. In Amahara regional state total area of cultivated land, total production produced and average productivity was 0.163 million ha, 0.1466 million ton and 0.899 ton/ha respectively. In Oromia regional state the total area of land, total output produced and average productivity was 0.036 million ha, 0.0279 million ton and 0.775 ton/ha respectively. This average productivity was low when relative with other region of Ethiopia [15]. This study focuses on review level of efficiency and identifies factors that affect efficiency in the study area
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