Abstract:
This study was conducted to estimate the technical efficiency of smallholder wheat producers
and identify its determinants in Soro district of Hadiya zone, southern Ethiopia. Cross
sectional data from a random sample of 125 wheat producing farmers collected during
2015/16 production season were used for the analysis. The estimated results of the Cobb-
Douglas frontier model with inefficiency variables shows that the mean technical efficiency of
the farmers in the production of wheat is 72 percent. This reveals that there exists a
possibility to increase the level of wheat output by about 28 percent through exploiting the
existing local practices and technical knowledge of the relatively efficient farmers or reduce
current level of input application by 28 percent and produce the same output given the
existing technological level. The discrepancy ratio gamma (γ), which measures the relative
deviation of output from the frontier level due to inefficiency, was about 63 percent. This
implies that about 63 percent of the variation in wheat production among the sample farmers
was attributed to technical inefficiency effect. The maximum likelihood parameter estimates
showed that wheat output was positively and significantly influenced by the amount of DAP
and Urea fertilizers, oxen day, expenditure on herbicide and area of wheat plot. The
estimated SPF model together with the inefficiency parameters shows that age, education
level, land ownership, fertility status of the wheat plots and extension contact negatively and
significantly affected technical inefficiency of wheat production implying that improvement in
these variables improves technical efficiency. However, land fragmentation positively and
significantly affected technical inefficiency showing that this variable has negative influence
on technical efficiency. Hence, emphasis should be given to improve the 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 the
above mentioned determinants.
