Technical Efficiency of Wheat Producing Farmers in the Case of Bale Zone of Oromia Region, Ethiopia: An Application of Stochastic Frontier Approach

Endalew Muluneh Amena

doi:10.7176/jesd/11-11-07

Abstract

This study was designed to investigate the level of wheat producing farmer’s efficiency and its major determining factors in Bale zone. Both primary and secondary information were collected and multi stage sampling techniques was used to collect the primary information. In the first stage, three woredas were identified purposively for the main reasons that wheat is the most important cereal crops produced in the districts. In the second stage, two administrative kebeles were purposively selected for similar reason of potential wheat production, and in sum 6 administrative kebeles were selected and the total sample size (n) of 344 households was determined. Stochastic production frontier approach was used in this study which Cobb-Douglas production functional was selected for the study. Given the functional form used, estimation procedure implemented, distributional assumption of the inefficient effect, ui, the mean technical efficiency is estimated to be 67%. This value indicates that most farmers are not technically efficient in producing wheat in the study area in that on average they can increase the output they are currently obtaining by 33 percent without increasing the existing level of inputs; labor, area and seed. Education attainment of the household , sex of household head, asset owned , extension contact, membership in iddir, distance to nearby all wheather road, family size,and adption of new variety seed were identified to be the variables significanlty affecting the efficiency of wheat producing farmers . Government should work further to improve educational status of farmers, strengthen the effectiveness of extension services in order to enhance the level of household’s technical efficiency and there should also be effective way to disseminate new variety seeds and new technologies in order to enhance technical efficiency of wheat production. Keywords: efficiency, technical efficiency, wheat production, food security DOI: 10.7176/JESD/11-11-07 Publication date: June 30th 2020

Highlights

Even though the share of service sector is increasing, agricultural sector remained the single largest sector dominating the economy of Ethiopia
Estimation of the production function Before discussion the estimation of, let us see the summary of variables which have significantly correlated with technical efficiency of wheat producing farmers at the study area
Technical Efficiency Scores Given the functional form used, estimation procedure implemented, distributional assumption of the inefficient effect, Ui, the mean technical efficiency is estimated to be 67 percent. This value indicates that most farmers are not technically efficient in producing wheat in the study area in that on average they can increase the output they are getting by 33 percent without increasing the existing level of inputs; labor, area and seed

Summary

Introduction

Even though the share of service sector is increasing, agricultural sector remained the single largest sector dominating the economy of Ethiopia. The sector contributes about 80% of foreign exchange earnings and more than 70% of raw material for industrial sectors in the country (Word Bank, 2016). This implies that increase/decrease in agricultural productivity has significant impact on the overall economic the country. Literature revealed that 60% of the sector’s share goes to crop production whereas livestock production accounts for about 27% and other activities account for 13% of the output (Mann and Warner, 2015)

Methods

Findings

Discussion

Conclusion