Abstract:
HIV/AIDS reduces farm productivity, increases economic dependency and leads to increased household expenditures. Hence, this study was initiated with the aim of analyzing the impact of HIV/AIDS on the agricultural production efficiency of farm households and identifying factors affecting production efficiency of farm households in the study area. The study was carried out in Kacha-Birra district and data were collected from a total of 100 randomly selected farm households (50 affected and 50 non-affected households). Descriptive statistics, budgetary analysis and econometric tools were used to analyze data. Econometric tools, namely Cobb-Douglas production function and stochastic frontier model were used to quantify yield and production efficiency differentials between the two groups of farm households. The results of this study indicated that about 54.5% of the sample households explicitly reported HIV/AIDS as the direct cause of death. The majority of the affected respondents (81.8%) were in the productive age group (15-64 years). The affected households were subjected to impoverishment and asset depletion which made more difficult to send their children to school as compared to the unaffected households. In response to the shocks of HIV/AIDS, affected households adopted different strategies, such as labor sharing arrangements, hiring labor and forcing children to drop out of school. The average gross revenue, average gross margin and farm profit forHIV non-affected householdss were higher than for HIV farms. The average gross margins for the two farm groups are statistically different at 1 percent level. Estimation of the CD production function showed that the value of crop yield of the affected households were lower than that of the non-affected ones. The yield difference between the two groups of households was due to both technological and input use differences such as labor, cultivated land, fertilizer and improved seed. The chow-test statistic confirmed the negative impact of HIV/AIDS on households with infection when compared to households without infection with respect to farm yield. The inefficiency model revealed that households with HIV infection had higher inefficiency indices. Therefore, to mitigate the impact of HIV/AIDS, location specific programs should be designed to strengthen the capacity of rural households by improving their access to the limited resources and developing technologies that can make optimal use of limited resources
