Analysis of Technical Efficiency of Small Holder Maize Growing Farmers of Horo Guduru Wollega Zone, Ethiopia: A Stochastic Frontier Approach

Abstract

The objective of this study was to examine the level of technical efficiency of smallholder maize producers and identify its determinants in Horo Guduru Wollega zone of Oromia Regional State, Ethiopia. A Cobb-Douglass stochastic production function model was used for the analysis. To specify technical inefficiency effects of socioeconomic variables, Maximum Likelihood Estimation (MLE) technique using data collected from 120 randomly selected sample farmers in 2011 was applied. The MLE results reveal that farm size under maize cultivation, chemical fertilizer (DAP) and maize seed are the major factors that are associated with changes in the maize output. The effect of land area on output is positive and the coefficient is found to be significant, implying the economies of scale. The test result indicates that there is inefficiency in the production of maize in the study area. The relative deviation from the frontier due to inefficiency is 85 percent. The average estimated technical efficiency for smallholder maize producers ranges from 0.06 to 0.92 with a mean technical efficiency of 0.66 (66%). The analysis also reveals that the educational level of the farmer, age of household head, land fragmentation, extension services, engagement in off-farm/non-farm activities, and total land holding of the farmer are the major socioeconomic factors influencing farmers’ technical efficiency and maize output. The implication of the study is that technical efficiency in maize production in the study area could be increased by 34 percent through better use of available resources, given the current state of technology.

Keywords: Food security, Maize, Technical Efficiency, Stochastic Frontier Analysis, Horo Guduru Wollega