Journal of
Development and Agricultural Economics

  • Abbreviation: J. Dev. Agric. Econ.
  • Language: English
  • ISSN: 2006-9774
  • DOI: 10.5897/JDAE
  • Start Year: 2009
  • Published Articles: 448

Full Length Research Paper

Economic efficiency of smallholder farmers in barley production in Meket district, Ethiopia

Getachew Wollie
  • Getachew Wollie
  • Department of Economics, College of Business and Economics, Samara University, Ethiopia.
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Lemma Zemedu
  • Lemma Zemedu
  • Department of Agricultural Economics, College of Agriculture and Environmental Sciences, Haramaya University, Ethiopia.
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Bosena Tegegn
  • Bosena Tegegn
  • Department of Agricultural Economics, College of Agriculture and Environmental Sciences, Haramaya University, Ethiopia.
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  •  Received: 10 May 2018
  •  Accepted: 31 July 2018
  •  Published: 31 October 2018

Abstract

This study analyzed the economic efficiency of smallholder farmers in barley production in the case of Meket district, Amhara National Regional State, Ethiopia. A cross sectional data collected from a sample of 123 barley producers during the 2015/2016 production season was used for the analysis. Two stages random sampling method was used to select sample respondents. The translog functional form was chosen to estimate both production and cost functions and OLS estimation method was applied to identify allocative and economic inefficiencies factors, while technical inefficiency factors were analyzed by using single stage estimation approach. The estimated stochastic production frontier model indicated input variables such as fertilizer, human labor and oxen power as significant variables that increase the quantity of barley output, while barley seed had a negative effect. The estimated mean levels of technical, allocative and economic efficiencies of the sample farmers were about 70.9, 68.6 and 48.8%, respectively which revealed the presence of a room to increase their technical, allocative and economic efficiencies level on average by 29.1, 31.4 and 51.2%, respectively with the existing resources. Among the hypothesized factors expected to affect technical, allocative and economic inefficiencies, extension contact and number of barley 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 farm households. Hence, emphasis should be given to decrease the inefficiency level of those more inefficient farm households via experience sharing among the better of farmers and usage of improved or certified barley seed. Besides this, policies and strategies of the government should be directed towards increasing farmers’ education, improve the system of input distributions and institutional facilities. 

Key words: Economic efficiency, stochastic frontier, trans-log, ordinary least square, Meket, barley.