A THESIS SUBMITTED TO THE DEPARTMENT OF ECONOMICS, COLLEGE OF BUSINESS AND ECONOMICS, SCHOOL OF GRADUATE STUDIES, ARBA MINCH UNIVERSITY FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENTS OF MASTER OF ARTS (MA) DEGREE IN ECONOMIC

Abstract

This study analyzes the extent and production efficiency of maize producer in Mareko Woreda Gurage zone Southern Ethiopia using cross sectional data collected from a sample of 136 maize producers during the 2021/22 production season by applying multi stage random sampling. To address the objective of the study, both descriptive statistics and econometric models were used to analyze the data. The Cob-Douglas functional form was chosen to estimate both production and cost function and OLS estimation method was applied to regress allocative and economic inefficiency factors while, technical inefficiency factors were analyzed by using two stage estimation approach. The estimated stochastic production frontier model indicated that input variables such as fertilizer, human labor and oxen power were the significant variables to increase the quantity of maize output. The estimated mean levels of technical, allocative and economic efficiencies of the sample farmers were about 61.7%, 56.62% and 67.65%, respectively which revealed that, presence of a room to increase their technical, allocative and economic efficiencies level on average by respectively with the existing resources. Among the hypothesized factors that affect technical, allocative and economic inefficiencies; extension contact and number of maize plots significantly and negatively affected all inefficiencies level. Besides, distance of residence from the nearest main market was found to have a positive and significant effect on all inefficiencies of sampled household farmers. On the other hand, participation of the households in non-farm income activities and their farming experience had positive while, livestock ownership had negative and significant effect on allocative and economic inefficiencie