Smallholder Wheat Production Efficiency in Selected Agro-ecological Zones of Ethiopia: A Parametric Approach

Abstract

Wheat productivity is very low in Ethiopia. Improving production efficiency is one of the options for enhancing wheat productivity. To identify the level of production efficiency and sources of inefficiencies, this study was carried out in three major wheat producing agro-ecologies. It used cross-sectional data collected from randomly selected 381 farm households for 2012/13 cropping season. A Cobb-Douglas Production Function and Stochastic Frontier Analysis were employed to achieve the objectives. The study found considerable variation in production efficiency among agro-ecologies and within agro-ecology. The mean technical efficiency estimates for lowland, midland and highland agro-ecologies were 57 percent, 82 percent and 78 percent, respectively. The technical efficiency ranges from 24.4 to 88.6 percents in the lowland, 51.6 to 94.4 percents in the midland, and 34.5 to 94.3 percents in the highland agro-ecologies. There is more capacity to increase wheat yield given the current state of technology and input levels. Wheat output elasticities associated with land, labor, chemical fertilizers and other inputs (seed and pesticides) were positive and significant in the lowland whereas in mid and highland agro-ecologies, output elasticities of land and chemical fertilizers were significant. Age of household head, livestock holding size, practice of crop rotation, access to credit and improved seed, and family size were significant factors that affect wheat production efficiency. To enhance wheat production and productivity, agricultural extension activities need to target agro-ecological orientation, the identified efficiency determining socioeconomic characteristics, and farm inputs utilization of households.

Keywords: Wheat in Ethiopia, Efficiency, Cobb-Douglas, Stochastic Frontier Analysis