Analysis of technical efficiency of small holder wheat-growing farmers of Jamma district, Ethiopia

Abstract

Background: A large majority of Ethiopians and the poor living in rural areas are deriving their livelihood from agriculture. The existence of inefficiency in production comes from inefficient use of scarce resources. The measurement of efficiency in agricultural production is important issue for agricultural development, and it gives useful information for making relevant decision in the use of these scare resources and for reformulating agricultural policies. Moreover, since social development is dynamic, it is imperative to update the information based on the current productivity of farmers. However, the productivity of agricultural system in the study area is very low. The aim of this study was to determine the level of technical efficiency of smallholder wheat producers and identify factors affecting technical efficiency of smallholder farmers in wheat production of Jamma district, Ethiopia. Result: The maximum likelihood parameter estimates showed that wheat output was positively and significantly influenced by area, fertilizer, labor and number of oxen. The estimated mean levels of technical efficiency of the sample farmers were about 82%. The estimated stochastic production frontier model together with the inefficiency parameters showed that age, education, improved seed, training and credit were found to have negative and significant effect on technical inefficiency, while farm size was found to have positive and significant effect on technical inefficiency of wheat production. Conclusions: We conclude that there is a room to increase wheat output from the existing level if farmers are able to use these input variables in an efficient manner. Hence, local government should provide necessary supports such as formal as well as informal education, training, credit, improved seed and timely supply of fertilizer.