Analysis of Factors Affecting the Technical Efficiency of Coffee Production in Jimma Zone: A Stochastie Frontier Analysis.
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Date
2010-05
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A.A.U
Abstract
Ethiopian coffee production and its productivity level are unsatisfactory to uphold the country's
comparative advantage. The study intends to examine possible reasons for low productive
performance of coffee using cross sectional data gathered from Jimma zone. An attempt to
measure technical efficiency of coffee producers, analysis of its determinants and the impact of
various distributional assumptions on technical efficiency estimates is made. Accordingly, both
error component model and technical inefficiency effects model have been estimated in one step
approach after data have been transformed. Maximum likelihood estimate of technical
inefficiency
was obtained from truncated normal model which was supposed to describe the data adequate ly.
The result revealed that various distributional assumptions of technical inefficiency have
approximately similar impact of on TE estimates. On average, coffee producers are 72%
efficient, implying that there is ample opportunity for these farmers to raise output level at
present technology. There is also advantage of scale economies linked to increasing returns to
boost output. Except fertilizer, overutilization of other inputs leads to inefficiency.
Technical inefficiency effects are modeled as a function of farmer specific socio-economic
factors. Education, distance, family pressure and poor so il fertility tends to increase technical
inefficiency of farmers whereas off farm income, proximity to market, cereal crop production,
sex and good soil fertility improves their technical efficiency. Farmers can still produce higher
output under available technology, indeed. Therefore, government should target at development
of rural infrastructure, work diversification, rural employment creation, promotion of rural female
management through awareness creation and soil conservation to overturn output loss by
technical inefficiency of coffee producers in Jimma zone.
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Analysis of Factors affecting the Technical Efficiency, of Coffee Production in Jimma Zone