Economic Efficiency of Sorghum Production for Smallholder Farmers in Eastern Ethiopia: The Case of Habro District

Abstract

This study aimed at estimating the technical, allocative, and economic efficiencies of smallholder sorghum farmers and identifying factors that determine them in Habro district.  Cobb-Douglas production function was fitted using stochastic production frontier approach to estimate technical, allocative and economic efficiency levels, whereas Tobit model was also used to identify factors affecting efficiency levels of the sample farmers. The mean technical, allocative and economic efficiencies of sorghum farmers were 74, 44 and 32 percents, respectively. Results of the Tobit model revealed that age, sex and farm size affect technical efficiency positively and significantly, while experience and land fragmentation affect technical efficiency negatively. The result also indicated that experience and education have positive and significant effect on allocative efficiency while age and sex were found to have significant negative effect. The result of the study also shows that farm size has a positive and significant effect on economic efficiency whereas land fragmentation and extension contact affect economic efficiency negatively and significantly.

Keywords: sorghum, production, efficiency, stochastic frontier, tobit