Technical Efficiency of Smallholder Farmers in Ethiopia: Evidence from Selected Regions
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2009-06
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Abstract
This study estimates technical efficiency and identifies inefficiency facial's of smallholder farmers in four
selected areas in Ethiopia using Ethiopian rural household survey date of 2004. The study classified
farmers by their region and selected four villages to estimate their technical efficiency levels. The paper
employed stochastic frontier production function to estimate parameters of the frontier function and the
inefficiency scores simultaneously using Maximum Likelihood estimation. The empirical results indicate
that technical inefficiency characterizing cereal production using transom production. function bitter fits
the data from all villages used in this study. Empirical evidence show that the mean technical efficiency
ranged from 0.53 to 0,74. An examination of the relationship between technical efficiency and various
socioeconomic and institutional variables revealed that formal education, access to credit. number of
livestock owned. off-farm income. age and sex of household head and family size were found 10 be
important factors explaining technical efficiency of cereal production in the study villages. However, the
importance of these variables in explaining technical efficiency differs across villages. The results
suggested that any attempt 10 improve technical efficiency of farmers should give due attention to these
factors and the difference among villages in terms of ecology and institutional factors need to be
considered both in an effort 10 improve efficiency of utilizing the available resources and developing
improved technologies in the long run.
Key words: Technical efficiency. stochastic frontier' transom production function. Ethiopia
JEL Classification: C2 1, C24, Q 12, Q 14..
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Smallholder Farmers, Technical Efficiency