Technical Efficiency of Red Pepper Production and Its Determinants Among Smallholder Farmers in Shashogo District of Hadiya Zone, SNNP Region, Ethiopia

Berhanu Getinet Kibret

doi:10.7176/jrdm/58-04

Abstract

This study briefly estimates the technical efficiency level of red pepper production and identifies its determinants that influence the technical efficiency. To analyze data, both descriptive statistics and econometric models were used. Stochastic Frontier function that incorporated inefficiency factors was to provide estimates of technical efficiency and its determinants using data obtained from 119 randomly selected sample red pepper producers from three kebeles of the study district. The Trans log production function was found to adequately fit the data. The maximum likelihood parameter estimates showed that almost all input variables have positive and significant effects on production except land size which is allocated for red pepper production. The analysis showed that the mean technical efficiency of farmers was 73.66%, implying that output in the study area can be increased by 26.34% at the existing level of inputs and current technology by improving determinants of technical efficiency. Technical inefficiency effects are modeled as a function of farmer specific socio-economic factors. The result showed that among the variables that are supposed to determine technical inefficiency, education level of farmers, age, distance from residence to plot, experience, credit access, extension visit, slope of land and proximity to market are significantly influencing technical inefficiency of red pepper producers. Moreover, education, distance, extension visit, proximity to market and credit access tends to increase technical efficiency of farmers whereas age of household, poor quality of soil and slope of land decrease their technical efficiency. Therefore, the road, net work in the rural areas; development of telecommunication facilities, rural market centers (institutions) should have to be advocated and promoted by farmers and government to overturn output loss by technical inefficiency of red pepper producers in Shashogo District. Keywords : Technical efficiency, stochastic frontier, determinants, red pepper, Shashogo District DOI : 10.7176/JRDM/58-04 Publication date : August 31 st 2019

Highlights

Though agriculture remains to be the most important sector of the Ethiopian economy, its performance has been disappointing and food production has been lagging behind population growth (Demeke, 2008) and unable to fulfill the requirement of the ever-increasing demand of foods
This paper investigated the efficiency of red pepper farmers and its determinants that aimed at increasing production and improving efficiency of the study area and the country large
This study result explained the existence of technical inefficiencies in red pepper production

Summary

Introduction

Though agriculture remains to be the most important sector of the Ethiopian economy, its performance has been disappointing and food production has been lagging behind population growth (Demeke, 2008) and unable to fulfill the requirement of the ever-increasing demand of foods. Poor use of modern inputs can partly explain the low productivity of the sector and the inefficiency of the farmers in using the available agricultural resources (Kindie, 2005). Red Pepper is one of the most varied and widely used food items in the world It is a prominent cash crop for many developing countries farmers such as Ethiopia, Nigeria, Ghana, China, India, Pakistan, Bhutan, Indonesia, Cambodia and Thailand (Shih-wen et al, 2013). Rural farmers in Ethiopia are resource poor and operate on small-scale. They hardly use mechanized and other improved agricultural inputs and so it can be asserted that they still carry out their agricultural activities i n the ‘traditional ways’ and remains inefficient (Almaz et al, 2014). The sector can be a viable enterprise for income generation, poverty alleviation, job creation and improvement of food security to every household if the production is efficiently made(Mohammed et al, 2015)

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