Analysis of factors affecting technical efficiency of smallholder maize farmers in Ethiopia
Deme, Sorsie Gutema
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Agriculture is the dominant sector of the Ethiopian economy which typically consists of smallholder rain fed farming systems. Low production and productivity characterises Ethiopian agriculture resulting in the country being unable to meet the increasing food demand of its population. As a result, the country continuously faces food insecurity and to some extent relies on food aid and food imports. The key to growth of agricultural production in Ethiopia lies in increasing the productivity and efficiency of smallholder farmers. The Ethiopian government has given substantial policy emphasis to increased productivity of smallholder crop farmers through the Agricultural Development Led Industrialization (ADLI) strategy. The ADLI strategy emphasises on increasing the adoption and intensification of yield enhancing inputs such as fertilisers and improved seeds to boost crop productivity, especially maize which is the principal crop. In response to the efforts of the development strategy, substantial improvements in the adoption and utilisation of the yield enhancing inputs have been observed in maize production; however the maize yield is not showing expected improvements. The low levels of maize productivity might be the result of technical inefficiencies existing in smallholder production. Information about the technical efficiency of smallholder maize farmers at farm level is important for improvements in productivity. However in Ethiopia this information is limited making an empirical study of the technical efficiency necessary. The research investigated the factors affecting the technical efficiency of smallholder maize farmers in Ethiopia with the aim of generating reliable information about the level of technical efficiency and the factors affecting technical inefficiency of smallholder maize production. Stochastic Frontier Analysis technique was employed and the data for the research was secondary data obtained from the Central Statistical Agency of Ethiopia consisting of 438 observations. From the empirical estimation, it is found that nitrogen is an important input that can increase maize productivity significantly. Seed and labour inputs are found statistically insignificant in explaining maize production. The estimated value of y, which is a parameter used to indicate the proportion of total variance that is attributed to technical inefficiency is 0.99 and significant. The value of y revealed that about 99% of the random variation in output of maize production is attributed to the technical inefficiency component which indicates the importance of examining technical inefficiencies in maize production. The estimated mean technical efficiency score of the sample is 77% with the minimum and maximum efficiency scores of 3 to 96%, respectively. The mean technical efficiency implies that on average, the sampled maize farmers are able to obtain 77% of their potential output using the current production inputs. The finding suggested the presence of considerable levels of technical inefficiency that contributed to decreased maize productivity. The farmers have the potential to increase their maize production by about 23% by using their existing resources and technology more efficiently. While examining the determinants of technical efficiency, age, gender, household size, oxen, extension, irrigation, credit, seed type and soil protection were found to be important factors affecting the technical efficiency of the sampled maize farmers. The study revealed the possibility of improving the current low maize productivity by removing the technical inefficiencies. The current level of low technical efficiency can be addressed through increasing farmers’ access to rural credit and extension services, promoting soil and land conservation practices and by promoting small-scale irrigation schemes.