ECONOMIC EFFICIENCY OF HONEY PRODUCTION AMONG SMALLHOLDER FARMERS: THE CASE OF SEYO NOLE DISTRICT, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

Ethiopia has substantial potential in honey production with rich flora, funa and existence of large bee colonies. However, honey production in the country is characterized by low efficiency so that its economic contribution is not commensurable to its potential. This study analyzed economic efficiency of honey production among sampled farmers of 260 (130 traditional and 130 modern) of honey producers from Seyo Nole district, Ethiopia. Multi stage sampling technique was used to select representative sample households. Descriptive statistics and econometric models were used to analyze the collected data. Stochastic production frontier model with Cobb- Douglass type production functional form was used to estimate the level of efficiencies. The result of the model indicated that input variables such as beehive and human labor have positive and significant effect on honey output at different significance levels in honey production using traditional hives. Reserved land, beehive and supplemental feed were positively and significantly affected honey production using modern hive. The coefficient of Cobb-Douglas type production function are interpreted as elasticity and summing the individual elasticity yields a scale elasticity of 0.92 and 0.46 for traditional and modern production, respectively. This indicated that farmers facing decreasing returns to scale. The mean technical efficiency (TE), allocative efficiency (AE) and economic economic Efficiency (EE) of farmers who use traditional hive were 65%, 60% and 38%, respectively. The figures were 74%, 66% and 49%, for modern hive, respectively. The Tobit results indicated that sex, agroecology and hive shading positively and significantly influenced the TE and EE of traditionally honey producing farmers, while education level was negatively related to the efficiencies. Family size, agroecology and off-farm income were significantly affected AE of honey producers with traditional hive. Whereas, sex, education, family size, income, extension contact and training positively influenced the TE of modern producer.The results of this study show that there is an opportunity to increase the efficiency of honey production in the study area by giving special attention to the identified determinant factors.