Technical, Allocative and Economic Efficiency of Soya bean Production: The Case of Smallholder Farmers in Pawe District, Ethiopia

Abstract

This study was undertaken with the objective of assessing technical, allocative and economic efficiency of soya bean production and to identify factors affecting them in Pawe district. The data were collected from 203 randomly selected sampled households in Pawe district Northwestern Ethiopia. Both descriptive and econometrics model were employed to analyze the collected data. A stochastic frontier approach was applied to measure technical, allocative and economic efficiency of soya bean production. The estimated SPF model showed that amount of land, labor and DAP were found to explain the frontier function. The result found that the mean technical, allocative and economic efficiency was 72.72%, 35.378% and 25.05%, respectively. The estimated value of gamma was 0.7384 which indicates that 73.84% of the variation in soya bean output was due to technical inefficiency. This indicates there is a big opportunity to increase soya bean production in the study area through improving efficiency. For example, given fixed level of input and technology, there is opportunity to increase soybean yield by 27.28% in Pawe district. In addition, the Tobit model result showed that age, level of education, extension service, access for credit, farming experience, off/nonfarm income participation and training affected technical, allocative and economic efficiency of soya bean producer farmers in the study area. Depending on the findings the following recommendations are forwarded. Government or any stakeholder should facilitate timely access to DAP with reasonable price, reduction in interest rate of the lending institutions and increase training to farmers using farmer training centers.