Tea Out-Grower Challenges With Productivity and Efficiency Analysis Using Cobb-Douglas and Stochastic Frontier Model in Southwest Ethiopia

Abstract

Tea has a significant contribution to households' cash income in the study area. However, decreasing productivity in the sector with price volatility led to a decline in output. Due to this fact, the studies were assessing the production trend with their bottlenecks, and identify the determinant of tea productivity and inefficiency through Cobb Douglas and stochastic frontier model. Qualitative and quantitative type of data from primary and secondary data was used from 135 tea out-growers. Based on the result as we use the 2017/18 production year as a base year, the productivity of tea in 2020 production year is increased by 41.8% as the coverage of land for tea becomes increased by 53.6%. Lack of skill and knowledge (79.2%), lack of training and extension service 90.3%), low productivity (88.1%), the occurrence of pest and disease (80.7%), climate change (80.7%), weak market linkage (88.1%), monopoly market (69.2%, output price fluctuation (88.9%), and lack of centralized processing facilities (80.7%) were the major constraints on the production and marketing activity of tea out-growers in the study area. The result of Cobb Douglas model found that tea productivity was affected by the labor force, fertilizer, land size, and improved seed. While, technical inefficiency of tea production was determined by to level of education, frequency of extension contact, distance to district market, harvesting time, training, and participation to off/non-farm income. So, improving skill and knowledge of farmers through increasing extension service and training, on-time delivery of farm inputs, create market linkage, and improved tea nursery management were some of the recommendations forwarded to reduce tea production and marketing constraints in the study areas.