Analysis of Technical Efficiency of Small Holder Tef Producing Farmers: A Stochastic Frontier Approach

This Book was written using a cross sectional data collected in 2012/2013 production years for a total sample size of 120 households to analyze technical efficiency and to identify the principal factors that cause efficiency differentials. Cobb-Douglas functional form was used to estimate technical efficiency in tef production. The test result indicated that there is inefficiency in the production of tef and the relative deviations from the frontier due to inefficiency is 99%. The estimation of the frontier model with inefficiency variables shows that the mean technical efficiency of farmers in the production of tef is 0.576. The estimated stochastic production frontier model together with the inefficiency parameter suggests that any attempt to strengthen technical efficiency of small holder farmers in the areas must give due attention to the improvement of the principal causes for efficiency differentials which are statistically significant such as education level of household head, age, credit availability, off/non-farm activity, family size, extension contact, farm size and sex of the household head.