Production Efficiency of Smallholders' Vegetable-dominated Mixed Farming System in Eastern Ethiopia: A Non-Parametric Approach

Abstract

This study estimates technical, allocative and economic efficiencies and identifies their determinants in smallholders' vegetable-dominated mixed farming system of eastern Ethiopia. Technical, allocative and economic efficiencies were estimated by a non-parametric data envelopment analysis method. The mean technical, allocative and economic efficiencies were found to be 91, 60 and 56%, respectively. This indicates the existence of substantial allocative and economic inefficiencies of production in the study areas. An econometric analyses based on Tobit model indicate that asset, off/non-farm income, farm size, extension visits and family size were the significant determinants of technical efficiency, whereas asset, crop diversification, consumption expenditures and farm size have significant impact on allocative and economic efficiencies. This study also reveals that the cost excess owing to inefficiency in the sample is on average 44%, mainly as a result of allocative inefficiency, which is attributed to low asset ownership and farm size, high consumer spending, crop diversification and barriers to the flow of labour between farm and off/non-farm activities.