TECHNICAL EFFICIENCY OF SMALLHOLDER WHEAT PRODUCTION IN SORO DISTRICT OF HADIYA ZONE, SOUTHERN ETHIOPIA

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.