Economic efficiency of smallholder farmers in Rice production: the case of guraferda woreda, Southern nations nationalities people’s region, Ethiopia

Abstract

Ethiopia is emerging as an important rice growing country in Eastern Africa. However, its performance is unsatisfactory and production stood at behind the population growth. Improving productivity through introduction of modern technologies and/or improving the efficiency of inputs will be an important alternative to fill the gap between demand and supply. Thus, the aim of this study was to measure the level of technical, allocative and economic efficiencies and to identify factors affecting these efficiencies in Gurafera woreda. Two-stage random sampling technique was used to select 148 household heads and interviewed using a structured questionnaire during 2017/18 production year. Descriptive statistics, stochastic frontier and two-limit Tobit regression models were employed. STATA version 13.0 software was used to analysis the levels of technical, allocative and economic efficiencies. As a result, the mean technical and allocative efficiencies were 78.5 and 80.56%, respectively. While the mean economic efficiency was 63.18%. The average technical and allocative efficiencies implies that there exists a possibility to increase rice production by 21.5% without using extra inputs and decrease cost of inputs by 19.44%, respectively. The Cobb-Douglas production function result indicated that, rice output was positively and significantly influenced by land, labor. Seed, oxen, herbicide and DAP. Likewise, a two-limit Tobit model revealed that economic efficiency was positively and significantly affected by education, frequency of extension contact and cooperatives membership and variables like, proximity to market and nonfarm income affected it negatively. The results showed that there is an opportunity to increase the efficiency of rice production in the study area. Finally, policies target to motivate and invest in the provision of basic education, strengthen the existing agricultural extension system, organize non-member farmers in cooperative association and development of market and road infrastructures needs to improve economic efficiency of smallholder rice producers