Factors Affecting Allocative Afficiency of Teff Production in Southern Ethiopia: evidence from Gombora district: A Stochastic Frontier Analysis approach Factors affecting Allocative Efficiency of Teff Production in Southern Ethiopia

Abstract

Agriculture takes the best share of the Ethiopian Economy. Agriculture has been and continues
to assume center stage in the economic policy of Ethiopia. Teff is Ethiopia’s most significant
staple food crop among cereal production. However, its productivity is low due to an increase by
enlarged use of inputs or rising the efficiency of producers. Therefore, this study aimed to
estimate the level of allocative efficiency and identify its determinants on teff producers in the
district. For the study, cross-sectional survey data among 391 teff growers during the 2020/2021
teff growing season in the district were collected. For the study, descriptive statistics and
econometric methods such as the stochastic cost frontier model and two-limit Tobit model were
utilized. The results of diagnostic statistics of sigma squared (0.022) and gamma (0.876) were
statistically significant at a 1% significance level. Further, the stochastic cost frontier model
result showed that the cost of (land, seed, labor, oxen, and NSPB fertilizer) was statistically
significant at a 1% probability level whereas the cost of UREA fertilizer was significant at a 5%
probability level. The mean of allocative efficiency teff cultivator was 88%, while average teff
grower achieve a 10.2% cost saving through best utilization of current given economic resource
and technology. Moreover, the two-limit Tobit model result showed that farm size had positively
significant at 1% significance level whereas farmers’ age and sex had negatively significant at
5% significance level on allocative efficiency. Agricultural, rural development and extension
office, and another concern body should give important attention to teff allocative efficiency
which bases for enhancing teff yield. The summary of this teff production allocative efficiency by
policymakers and plan designers could bring better enhancement on teff cultivator. Improving
such a teff production allocative efficiency is a crucial option to enhance teff grower income and
crop yield, which is, in turn, crucial to alleviate poverty and food insecurity in the study area.