ANALYSIS OF TECHNICAL EFFICIENCY OF SMALL SCALE FARM HOUSEHOLDS IN WHEAT PRODUCTION (A Case Study in Goncha Siso Enesie Woreda)

Abstract

This study investigates the level and determinants of technical efficiency for a sample of small scale wheat producers in Goncha Siso Enesie woreda in the 2012/13 main cropping season by using a translog stochastic production frontier. The study involves the simultaneous estimation of a translog stochastic frontier model and a model for technical inefficiencies. Maximum likelihood method of estimation is applied to estimate technical efficiency from truncated normal model. Results of the analysis indicate that the mean technical efficiency of wheat producers in Goncha Siso Enesie woreda is 79.3 percent; however, this ranges from 31 . 8 percent to 99.4 percent implying that there is a potential to raise wheat productivity by 20. 7 percent given the level of inputs and technology. The results of the farmer-specific technical inefficiency effects model shows that farmer-specific • i socio economic variables affect the level of inefficiency. These variables include age, male headed households, livestock ownership of wheat farmers, attaining primary education, amount \ ' of non-wheat crops produced by farmers, access to credit, extension visit, use of improved wheat seeds, use of manure, and use of pesticide affect technical efficiency positively. On the other hand, distance of the wheat farm from the household's home, age-square and dependency ratio ' are found to affect- technical efficiency negatively. The rest variables incorporated in the technical inefficiency model such as farm size, attaining secondary education, family size of households, off-farm income earned ' by farmers, proximity to the market, irrigation use, membership and participation to local organizations, slope of the wheat plot from farmer's home, cropping pattern are statistically insignificant variables. There is also increasing returns to scale of wheat output to farm inputs of land, labor, fertilizer, seed and oxen days used for wheat production. Based on the findings of the study, the government, as an agent to implement policies, is recommended to take some measures to improve technical efficiency of small scale wheat farmers in Goncha Siso Enesie Woreda.