Analysis of Technical Efficiency of Coffee Production on Small Holder Farmers in Case of Sasiga & Limu Districts of East Wollega Zone

Abstract

The study entitled on Analysis of production Efficiency of coffee was conducted using cross-sectional data collected in 2013/14 production year from a total sample size of 200 households from Limu and Sasiga district of East Wollega zone. The aim of the study was to measure production efficiency of Coffee and to identify the principal factors affecting efficiency among Coffee producing farmers in the study area. The results of production efficiency were obtained using parametric stochastic production frontier (SPF) model. The results indicate that there was inefficiency in the production of Coffee in the study area and Farmers are efficient for Half -normal and truncated normal distribution about 74% and 89% average score of efficiency respectively while 26% and 21% of output lost due to random shocks.  The mean technical efficiency was about 88%. Econometric results obtained from half -normal and truncated –normal frontier model indicate that labour and land has significant at 1percent level of significance but negative sign which imply efficient farmers has employed lower amount of land and labour inputs. In other case seed and oxen are significant and positive at 1 percent and 5percent respectively implying efficient farmer has higher units of oxen and seed. Increased distance between of plots and Female household head are more efficient than male household head because of better in management of resources. Woina dega/dega farmers are 0.25 times efficient than cola farmers.  There  exists  of   a   positive  and negative association between   land  square  and   fertilizer  square   with  production  efficiency and The second order parameter of interaction between livestock and labour, seed and land , land and fertilizer are   significantly different from zero . The mean production efficiency levels further suggest that Coffee growing farmers in the study area could increase their production by 22% given the existing technology and inputs by avoiding production inefficiency. Thus the results suggest that there need to be policies geared towards enhancing production efficiency of farmers so as to enhance their productivity and export-competitiveness of this commodity.