Measurement of Technical Efficiency and Its Determinants in Wheat Production: The Case of Smallholder Farmers in Wogidi District, South Wollo Zone Ethiopia

Abstract

Growth in agriculture was one of the major drivers of the remarkable economic growth recorded in Ethiopia in the last decade. The major grain crops grown in Ethiopia are wheat, teff, maize, barley, sorghum and millet. 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 Wogidi district, South Wollo Zone, Ethiopia. A three-stage sampling technique was employed to select 123 sample farmers who were interviewed using a structured schedule to obtain data pertaining to Wheat production during 2016/2017 production year. A Cobb-Douglas stochastic frontier production analysis approach with the inefficiency effect model was used to estimate technical efficiency and identify the determinants of efficiency of Wheat producing farmers. The maximum likelihood parameter estimates showed that Wheat output was positively and significantly influenced by area, fertilizer, labor and number of oxen. This would mean 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. The estimated mean levels of technical efficiency of the sample farmers were about 82%. This shows that there exists a possibility to increase the level of Wheat output by 18% through efficiently utilizing the existing resources. 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. Hence, local government should provide necessary supports such as formal as well as informal education, training, credit, improved seed and timely supply of fertilizer.

Keywords: Wegidi district; stochastic frontier analysis; Technical efficiency; Wheat