Technical Efficiency of peasant farmers in Northern Ethiopia: a stochastic frontier approach

Course ID
Ethiopian Economics Association (EEA)
Zenebe Gebreegziabher

Empirical works on efficiency of small farmers has been triggered by Schultz’s (1964) popular ‘poor-but-efficient hypothesis’. Peasant farmers in traditional agricultural settings are reasonably efficient in allocating their resources and they respond positively to price incentives. If farmers are reasonably efficient, as hypothesized by Schultz, then increases in productivity require new inputs and technology to shift the production frontier upward. If, on the other hand, there are significant opportunities to increase productivity through more efficient use of farmers’ resources and inputs with current technology, then a better allocation might be essential.

But how to measure and compare their efficiency? The concept of efficiency measurement by means of a frontier method has its origin with Farrell (1957). Several different approaches could be applied (see e.g. Fried et al. …. for an overview). We have chosen for the output-oriented or primal approach, where the central issue is by how much output could be expanded from a given level of inputs.

The empirical analysis uses a stratified sample of farm dataset refers for the 1996 and 1997 production years. Farmers in the sample are located particularly in Enderta and Hintalo-Wajerat districts of the Tigrai region. A preliminary analysis showed that productivity differences among farmers are rather small (compared to other studies).

There appears to be increasing emphasis by policy-makers on investments in new technologies and inputs rather than efforts aimed at improving the efficiency of less efficient farmers. Obviously, the level of efficiency of peasant (small) farmers has important implications for choice of development strategy. As the choice of development strategy, at least partly rests on the policy makers’ conceptions of farm/ farmer-level performances. This analysis is intended to contribute to such strategic choices

Corporate Author: Alemayehu Seyoum … [et al.] (editor)
Publisher: Ethiopian Economic Association (EEA)
Primary Descriptors: Technical Efficiency; Stochastic production frontier

Secondary Descriptor: Peasant farmers

Geographic Descriptors: Ethiopia, Northern
Cataloge Date: 02/27/2013
Call Number: 330.963 PRO 2005
Serial Key Title: Proceedings of the Second International Conference on the Ethiopian Economy
Publication catagory: International Conference
Content type: EEA Publication
Volume: II
Publication date: 2013-05-27 23:05:00
Forum or Discussion date: 2013-02-27 14:55:45
Place of publication: Addis Ababa, Ethiopia
Type of material: Book
Current frequency: Annualy
Author: Zenebe Gebreegziabeher,Arie Oskam et al.

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