Abstract
Wheat (Triticum aestivum) is one of the major staple cereal crops in Ethiopia. High productivity and efficiency in its production is critical to improve food security, reduce the level of poverty and achieve agricultural growth. Therefore, the objective of study was to measure the level of technical efficiency of wheat producers and to identify factors that contribute for efficiency differences among smallholder farmers in the study area. The study was based on cross-sectional data collected from 154 wheat producer farmers by multi- stag sampling technique during 2017/18 production season. Technical efficiency of sampled farmer in wheat production was estimated by Cobb-Douglas functional form in stochastic frontier model (SFM) with single stage estimation method. The estimated SFM indicated that land, labor and seed were significantly and positively influence wheat production at1 percent of significant level. However, urea was negatively influence wheat production at 10 percent of significant level. Production function in wheat production existed in increasing return to scale (1.22). The estimated gamma (γ) parameter was about 0.29.It indicated that the relative deviations of actual output from the frontier output due to inefficiency. The estimated mean level of TE of wheat producers was 0.79. From specific socioeconomic and institutional factors hypothesized that influence technical efficiency of farmers in wheat production, credit access and frequency of extension contact were significantly and positively influence the level of technical efficiency in wheat production at 10 percent of significance level. Education level was significantly and negatively influences the level of technical efficiency in wheat production at10 percent of significance level. Raw sowing and frequency of plowing were significantly and negatively influence the level of technical efficiency in wheat production at 5and1 percent of significance level, respectively. Therefore, the study suggested the above mentioned significant variables have important for policy implications in that development programs may give fruitful attention so as to mitigate the existing level of inefficiency of farmers in the production of wheat in study area. Keywords: Technical Efficiency, Stochastic Frontier Model, Single Stage Estimation, Ethiopia DOI : 10.7176/JESD/10-13-04 Publication date :July 31 st 2019
Highlights
Agricultural is the main Pillars’ of Ethiopian economy contributing about 36.2 percent to the GDP and 72.7 percent to national export earnings
Econometric Results Before proceeding to the discussion related to estimation and interpretation of results of stochastic frontier model (SFM) model parameters, from which individual level of technical efficiency may be estimated, the multicollinearity problem for continues and discrete explanatory variable by Variance Inflation Factor (VIF) and contingency coefficient(CC) respectively was checked
As rule of thumb show if contingency coefficient is greater than 0.75 the variable have multicollinearity, if it is less than 0.75 no multicollinearity problem (Gujarati, 2004)
Summary
Agricultural is the main Pillars’ of Ethiopian economy contributing about 36.2 percent to the GDP and 72.7 percent to national export earnings. It supplies available industrial raw materials while employing about 85 percent of the population (CIA, 2016). Within the category of grain crops, cereals are the major food crops both in terms of the area they are planted and volume of production obtained. They are produced in larger volume compared with other crops because they are the principal staple crops. 98 percent of cereals are produced by smallholder farmers and remaining two percent are produced by trader farmers mainly for seed purposes (Abu, 2014)
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