Farm Level Efficiency of Crop Production in the Central Highlands of Ethiopia

The gap between demand for and supply of food can be minimized by improving productivity either through introduction of modern technologies, reallocation of resources or improving the efficiency of production. It is however almost impossible to increase production by bringing more land and capital resources as they are very limiting in the rural parts of the developing world. Wheat, faba bean (horse bean) and lentil are the three most important crops in the central highlands of Ethiopia and enhancing the farm level efficiency of their production is a crucial component of the food security strategy of the government. This study aims at analyzing level and determinants of production efficiency of these crops by smallholder farmers in North Shewa zone. The study generated data from 480 randomly selected smallholder farmers in the 2015/16 production season. The study estimated, technical, allocative and economic efficiencies using Data Envelopment Analysis technique. The results showed that mean technical, allocative and economic efficiencies were 77%, 69% and 53%, respectively, indicating a substantial inefficiency in the production of these important crops. Analysis of determinants of efficiency using a double-bounded Tobit model indicates that age, education, off/non-farm income, livestock holding, credit access, extension contacts, market distance, distance to all weather road and average farm plots distance significantly affect efficiency of production. The findings of the study show that the production efficiency of these crops can be significantly improved through increased integration of the crop and livestock subsystems, investment of basic education and infrastructure, and improvement of the agricultural extension system and the rural credit services.