ECONOMIC EFFICIENCY OF TEFF PRODUCTION: THE CASE OF HADERO-TUNTO ZURIA DISTRICT, KEMBATA TEMBARO ZONE, SOUTHERN ETHIOPIA

Abstract

Teff is one of the dominant cereal crops in Hadero-Tunto Zuria ditrict. However, there was great productivity difference among the teff producing farmers in the district because of their efficiency difference in using the existing resource. Accordingly, this study was conducted to measure the technical, allocative and economic efficiencies of smallholder teff producers and to identify factors that determining overall efficiencies in the district. Cross sectional data from 185 randomly selected sample teff producing farmers collected during the 2018/19 production season were used for the analysis. Mulit-stages sampling techniques were used to select sample respondents. A Cob-Douglas SFP function was used to estimate the level of technical efficiency and dual cost frontier functions was used to estimate the level of allocative efficiency. Tobit model was used to identify determinants of technical, allocative and economic efficiencies differentials among sampled respondents. The mean levels of technical, allocative and economic efficiencies 70.7%, 62% and 44.3%, respectively. These result implies that there are possibilities to improve level of technical, allocative and economic efficiency of teff producing farmers in the study area by 29.3%, 38% and 55.7% respectively with prevailing resources. The discrepancy ratio gamma (γ) which measures the relative deviation of output from the frontier level due to inefficiency was about 67.16 %. The SFP function showed that teff output was positively and significantly influenced by the amount of DAP and UREA fertilizers, labor force, oxen day, and area under teff plot. The Tobit regression model showed shows that sex, education status, soil fertility, livestock ownership, off-farm income activities, training, credit and extension contact negatively and significantly affected economic inefficiency of farmers. However, farm size and distance to nearest market positively and significantly affected economic inefficiency. Hence, emphasis should be given to improve the economic efficiency of teff producing farmers by improving their education, asset ownership, access to credit, and sharing the experience of economically efficient farmers to inefficient farmers which help to increase the teff productivity in the area.