Analysis of farm households’ price efficiency in the production of Maize: The case of Abobo District, Gambella Regional State, Ethiopia: An application of stochastic frontier analysis and dual cost approach
DOI:
https://doi.org/10.20372/vsggzf08Keywords:
Cobb-Douglas, Dual Cost, Price Efficiency, Stochastic frontier, TobitAbstract
Even though agriculture is the backbone of the Ethiopian economy, its performance is unsatis- factory, and food production is very low compared with population growth. As the possibility of improving production by bringing extra resources into use became increasingly restricted, the efficiency with which the farmers use existing resources has received the utmost attention to block the gap between the supply and demand of food. However, price efficiency in maize production has not been extensively studied because previous studies mainly focused on eco- nomic efficiencies. This study was carried out to analyse the productivity and price efficiency of smallholder farmers in maize production in the Abobo district, Gambella Regional State, Ethiopia. To meet the objectives of the study, secondary data were used in addition to the pri- mary data. The primary data were gathered via structured questionnaires from 152 randomly selected sample households during the 2023/24 production year, and secondary data were col- lected from different sources. Cobb-Douglas production function was applied to analyse the productivity, whereas the Tobit model was used to estimate farm households’ price efficiency. The results of the survey showed that mean price efficiency was estimated to 70.9%, implying that there exist considerable levels of price inefficiencies in the production of maize in the study area. The Tobit model results revealed that livestock holding, frequency of extension contact, land fragmentation and off/non-farm activity had a considerable effect on price efficiency. The result of the study shows that there exists an opportunity to boost the efficiency of maize pro- ducers in the study area. In addition, policy measures derived from the results of the study include increasing the livestock production, strengthening the extension services, promoting off/non-farm activity and raising the resettlement programs in the study area.
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