SMALLHOLDERS’ TECHNICAL EFFICIENCY AND MARKET SUPPLY OF HONEY IN CENTRAL ZONE OF TIGRAY, NORTHERN ETHIOPIA

Abstract

Measuring production efficiency in agriculture, mainly, focusing on technical efficiency, enables to enhance productivity without necessarily increasing the resource base or developing new technologies thus contributs to sustainable economic growth. This study was conducted in two districts of Central Zone of Tigray region, which are among the major honey producing areas in the Tigray region aimed at analyzing the technical efficiency of smallholder honey producers and to identify determinants of technical inefficiency and honey market supply of honey in the study area. Cross sectional data was collected using personal interview from 139 sample honey producer households selected using multi-stage sampling procedure. Descriptive statistics and the econometric models: the stochastic frontier and Tobit models were used to analyze the data. Descriptive statistics was used to summarize the socioeconomic characteristics of the sample households. Cobb-Douglas functional form was used to specify the stochastic production frontier model. The stochastic frontier model (one-step procedure) was used to measure the level of technical (in)efficiency and to identify sources of technical inefficiency in honey production. The maximum likelihood parameter estimates showed that the variable inputs: modern beehive, traditional beehive, family labor and area of land allocated for apiary were found significant in determining honey output in the study area. The estimated mean technical efficiency was 0.75, which revealed the existence of technical inefficiency among the honey producers that calls for substantial improvement. This implied that the producer farmers in the study area were not highly efficient in using the production resources implying that there is a scope to enhance efficiency, which can implemented by improving important variables that found to have negative influence on technical inefficiency. Thus, honey output can be increased by 25 percent through efficient use of the available production inputs without investing on new beekeeping technologies. The stochastic frontier model result indicated that technical inefficiency was influenced negatively by frequency of extension contact, amount of non/off farm income, livestock holding and education level have significant contribution in reducing technical inefficiency. Tobit model was used to identify the determinants of market supply of honey. Result of the Tobit model indicated that market supply of honey was significant affected by number of bee colonies, improved input use, extension contact, access to market information and non/off farm income. The empirical finding of the study signifies that socioeconomic and institutional factors were found to affect technical inefficiency of honey producer households and market supply of honey. The study recommends the need to strengthen institutional supports including extension advisory service, development of an institutionalized and accessible marketing information system and enhance the households’ economic factors so that to reduce the existing technical inefficiency among the households and to increase market supply of the product