Analysis of Economic efficiency of coffee production technologies in the case of smallholder farmers in the selected districts of Hadiya Zone, Southern Ethiopia

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Research Paper 04/01/2023
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Analysis of Economic efficiency of coffee production technologies in the case of smallholder farmers in the selected districts of Hadiya Zone, Southern Ethiopia

Fekadu Ayele, Meleku Bonkola, Miressa Ragassa
Int. J. Biosci.22( 1), 95-111, January 2023.
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Abstract

Coffee is the primary source of income for more than 10 million households in coffee-growing African countries. Coffee also serves as an important source of export revenues and some of these countries rural population depend on this kind income. So, this study was carried to estimate and analyse factors affecting the level of economic efficiency of coffee production and its implication for increased productivity of coffee producers in the selected districts of Hadiya Zone. To achieve the objective, the target sample households were selected in multi-stage sampling techniques. Then, the primary data collected randomly from a sample of 200 households during 2013/14 production season. Cobb-Douglas production function was fitted using stochastic production frontier approach to estimate the efficiencies levels, whereas Tobit model is used to identify determinants that affect efficiency levels of the sample smallholder farmers. The estimated results showed that the mean technical, allocative and economic efficiencies were 81.78%, 37.45% and 30.62% respectively. It indicated that there was significant inefficiency in coffee production in the study areas. Among 14 explanatory variables hypothesised to affect the level of efficiencies, education level and extension contact of the sample household was the most important factor that found to be statistically significant to affect the level of technical, allocative and economic efficiency all together. In addition, farm size determined farmers’ technical, allocative and economic efficiencies negatively and significantly. Hence, in order to increase the economic efficiency level in coffee production, all concerned bodies and stakeholders should give due attention in determining coping up mechanism to significant determinants.

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