Technical Efficiency Difference between Model and Non-Model Smallholder Wheat Producer Farmers in Lode Hetosa Woreda of East Arsi Zone of Oromia Regional State, Ethiopia

Abstract

The smallholder farming system in Ethiopia is largely dominated by staple food crops which are exposed to managerial inefficiency and factors beyond the control of the farmer. Accordingly, the study aimed to analyze technical efficiency differences between model and non-model smallholder wheat producer farmers and inefficiency determinants in Hetosa Woreda of East Arsi Zone. The Stochastic Production Frontier Cobb-Douglas functional form was used. To analyze cross-sectional data collected from 700(350 model and 350 non-model) farmers for the production year of 2018/19, descriptive and econometrics data analysis techniques were used. The findings of the descriptive analysis showed that model farmers produced an average of 32.82 and non-model farmers produced on average 29.36 quintals of wheat per hectare. The value of the discrepancy ratio (γ) which indicates technical inefficiency variability was 89%, 82%, and 84% for the model, non-model, and overall farmers respectively. The mean technical efficiency score was 81%, 79%, and 80% for the model, non-model, and overall farmers respectively. Land, fertilizer, and labor statistically significantly affected the wheat output of model farmers, whereas all input variables statistically significantly affected the wheat output of non-model farmers. In addition, model farmers' technical inefficiency was statistically significantly determined by the mode of plowing, mode of harvesting, shock, training, and marketing, and that of non-model farmers’ technical inefficiency was statistically significantly affected by mode of harvesting, level of education, land fragmentation, and marketing. Thus, training, market, education, and strategic plan to mitigate factors beyond the control of farmers need to be considered for improvement to make farmers more productive and technically efficient in wheat production in the study area.