Technical Efficiency of Malt Barley Production in Malga District of Southern Ethiopia

Abstract

This study was conducted to assess the technical efficiency of malt barley production in Malga District of southern Ethiopia using cross-sectional data. Three stages sampling technique was applied to draw 186 sample farmers randomly. The interview schedule was pre-tested before conducting the actual data collection; data gathered from the sample households with the help of trained enumerators. In addition, secondary data were collected through review of relevant documents sources. Descriptive statistical analysis such as mean, standard deviation, minimum, maximum, frequency and percentage were used to analysis basic household characteristics. Cobb-Douglas stochastic frontier production function model was used to estimate technical efficiency and determinants of technical efficiency differentials in malt barley production. Maximum likelihood estimation results implied increasing input variables (area, seed, oxen, fertilizer and labour) would increase yield of malt barley production. The coefficients of elasticity of area, seed, oxen, fertilizer and labour were 0.88, 0.056, 0.033, 0.032 and 0.0125 respectively under malt barley. Consequently, malt barley exhibits increasing returns to scale as the sums of input elasticity were greater than one which is 1.018. The discrepancy ratio, γ, was about 0.67 indicating that about 67% of variation in malt barley yield among the sampled farmers was attributed to technical efficiency effects. The mean technical efficiency of sampled farmers in the production of malt barley was 0.82. The estimated stochastic production frontier model with the inefficiency variables implies that education, experience, extension and livestock positively and significantly affected technical efficiency of malt barley production. Hence, emphasis should be give to improve technical efficiency level of those less efficient farmers by adopting the practices of relatively efficient farmers in the area. Beside this, policies and strategies of the government should be directed towards addressing the implication of statistically significant policy variables.

Keywords: Technical efficiency, Cobb-Douglas stochastic frontier, Malt barley, Malga.

DOI: 10.7176/ISDE/12-1-03

Publication date: January 31^st 2021