Analysis of Resource Use Efficiency in Smallholder Mixed Crop-Livestock Agricultural Systems: Empirical Evidence from the Central Highlands of Ethiopia

Abstract

The study uses data generated through a survey from rural households in Ethiopian central highland districts to assess farm-level resource use efficiency in the production of major crops including teff, wheat and chickpea in the mixed crop-livestock agricultural systems of Ethiopia, under conditions of diminishing land resource and environmental constraints. Data Envelopment Analysis (DEA) results show that smallholder farmers are resource use inefficient in the production of major crops with mean technical, allocative and economic efficiency levels of 0.74, 0.68 and 0.50, respectively. A Tobit model regression results on the determinants of inefficiency reveal that livestock ownership and participation in off-farm activities are associated with reduced level of resource use inefficiency. Furthermore, large family size and membership to associations contribute to higher level of resource use inefficiency. The findings suggest that resource use efficiency would be significantly improved through a better integrated livestock and crop production systems; expansion and promotion of off-farm activities; and reform of farmer’s associations.

Keywords: Data Envelopment Analysis; Tobit; Resource use efficiency; mixed crop-livestock agriculture; Ethiopia