Determinants of Technical Efficiency in Maize Production: The Case of Smallholder Farmers in Dhidhessa District of Illuababora Zone, Ethiopia

Abstract

This study was conducted in Dhidhessa district of Illuababora zone in Ethiopia to measure the level of technical efficiency and identify its determinants in maize crop. A multi-stage sampling technique was employed to select 162 maize growing sample households. Inferential statistics and stochastic production functions were employed to achieve and interpret the result pertaining to objectives of the study. The Stochastic Production Frontier (SPF) result revealed that area allocated under maize and chemical fertilizers were appeared to be significantly influencing maize production at 1 percent probability level. The estimated gamma parameters indicated that 73% of the total variation in maize output was due to technical inefficiency. The average technical efficiency was 86% while return to scale (RTS) was 0.96 %.Based on the results, it was concluded that there existed scope for increasing maize output by 14 percent through efficient use of existing resources on the sample households. By improving the efficiency of maize production even through efficient use of existing resources of the farmers, an additional output of 2060 quintals of maize could have been produced on 7550 hectares of land allocated under maize production during the study period in the district. Thus, ample scope existed to realize higher output with existing resources and level of production technology. The socio-economic variables that exercised important role for variations in technical efficiency were age, education, improved seed, training on maize production and labor availability in the household. Nevertheless, participation on off farm income, interaction of off farm income and education, distance to market, and number of livestock were found to decrease efficiency significantly among farm household. Therefore, innovative institutional arrangement, education and farmers training accompanied with more access to fertilizer and improved seed were likely to enhance production efficiency in the study area.

Keywords: Technical efficiency, maize production, Stochastic Frontier, Dhidhessa district