Abstract:
Even though the agricultural sector in Ethiopia is one of the most important sectors in the
country,the productivity of the sector is lower compared to other developing countries.
Efficient use of resources supported by application of modern technologies becomes more
important to increase the productivity of the sector. This study was conducted in Legambo
district, Amhara region, Ethiopia; with specific objectives; to estimate the levels of
technical, allocative and economic efficiencies of smallholder producers in barley
production and identify the main factors affecting of inefficiencies. The study was mainly
based on the data obtained from 200 farmers selected through two stage sampling
technique. Cobb-Douglas production function was fitted using stochastic production
frontier model to estimate the levels of technical, allocative and economic efficiency;
while, the Tobit model was used to identify factors affecting of inefficiencies. The
estimated result of the frontier model indicated that there is space to increase barley
output by increasing the use of farm inputs. Besides, the mean technical, allocative and
economic efficiency of sample households were 75.1, 71.7, and 53.9 percent, respectively.
This implies that output can be increased by 24.9%; the input cost can be reduced by 28.3
% and production cost decreased by 46.1% with existing level of technology and
resources. A two-limit tobit model result indicated that technical efficiency positively and
significantly affected by sex, education, livestock, non-farm income, and credit use; while,
total expenditure had a negative and significant effect. The distance of farm from home
and distance to nearest market had a negative and significant effect on allocative and
economic efficiency; whereas, crop rotation and frequency of extension contact had a
positive and significant effect on allocative efficiency. Economic efficiency was negatively
and significantly affected by farm size; while, crop rotation, sex, non-farm income and
frequency of extension contact had a positive and significant effect. So, it is important to
formulating appropriate policies and strategies directed towards the above mentioned
significant variables of inefficiencies of in the district
