Economic Efficiency of Korerima [Aframomum Korerima] Production; Empirical Evidence from Smallholder Producers in Gewata District Kaffa Zone

Abstract

Purpose: This study aimed to evaluate the economic efficiency of Korerima [Aframomum korerima] production by determining the level of technical, allocative, and economic efficiency of production of smallholder producers.Methodology: The stochastic Production Frontier model was employed to estimate the elasticity of production function and level of efficiencies.  In the study area, there are 1250 smallholder Korerima [Aframomum korerima] producers. The combination of non-probability and probability sampling, named purposive sampling, two-stage, and simple random sampling was used to select 234 final sample units. Finding: The mean technical, allocative, and economic efficiency value of the sample households was 76.8%, 72.0%, and 55.0%, respectively. The result indicated that there exists room to increase the efficiency of Korerima [Aframomum korerima] production of smallholder producers. The determinants of the level of efficiency were the age of the household head, sex of the household head, family size, Education level, Extention frequency, Livestock holding, credit utilization, Experience in Korerima [Aframomum korerima] production, off-farm activities, land ownership, total cultivated land, and organic fertilizer utilization has a positive and significant impact on technical, allocative and economic efficiency.

Keywords: Technical efficiency, Allocative efficiency, Economic efficiency, production function, stochastic frontier model, censored Tobit model, Korerima [Aframomum korerima], Gewata District, Kaffa zone

DOI: 10.7176/RHSS/14-2-02

Publication date:March 31^st 2024