SAMARA UNIVERSITY

COLLEGE OF DRYLAND AGRICULTURE

DEPARTMENT OF AGRICULTURAL ECONOMICS

SEMINARY TITLE;DETERMINANTS OF PRODUCTIVITY AND

TECHNICAL EFFICIENCY OF TEFF PRODUCTION IN ETHIOPIA.

STUDENT NAME ID
1.MESGANU EDOSA 1301316
2.BIRHANU SISAY 1300960
3.HAYIMANOTGALANA 1301187
4.EBISE KIFILE 1301032

ADVISOR NAME; ABDULKARIM Y. (MSC).

SAMARA ETHIOPIA,

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TABLE CONTENTS

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1 Introduction

1.1 Background

In developing countries like Ethiopia, smallholder agriculture dominates a large

proportion of the population and poor reside in rural areas. The agricultural sector is
the most important sector in the Ethiopian economy that features strongly in the
overarching economic policy of the country agricultural development led
industrialization (ADLI). It serves as source of income and employment for the
majority of the country’s population. Currently, agriculture is contributes over 35.8
percent to the national GDP, almost 90 percent of export and 72.7 percent of
employment (CIA, 2018). However, the production, productivity and efficiency status
of the sector is well below world average. Mostly the farmers with the same resources
are producing different per hectare output, because of management inefficiency
inputs, limited use of modern agricultural technologies, obsolete farming techniques,
poor complementary services such as extension, credit, marketing, and infrastructure;
poor and biased agricultural policies in developing countries like as Ethiopia (FAO
and WFP, 2012; ATA, 2016). Cereals are the major food crops both in terms of the
area coverage and volume of production and accounts for 95 percent of agricultural
production in Ethiopia and contributed 87.48 percent of the grain production (CSA,
2018). Of them, teff (Eragrostis tef) is a warm-season annual cereal crop that belongs
to the grass family Poaceae is endemic to Ethiopia and has been widely cultivated for
centuries (Teklu and Tefera, 2005). in the total areas.

In the production year, the total area covered by teff was 1.43 million hectares with a
production of 2.56 million tonne and yield of 1.79 t/ha from2.57 million holders
(CSA, 2019). The total production of teff in Jimma zone for the year 2016/17 was
0.26 million tonnes produced by 0.55 million private peasant holders who were
engaged in wheat cultivation on 0.18 million hectare. Th eaverage productivity was
registered as 1.51 t/ha (CSA, 2017). Cereal crops sector in general and the teff
producing in particular face serious challenges in Ethiopia.

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The most common challenges are lack of, efficiency production system; climatic
factors, improved varieties, production inputs, improved management practices, soil
fertility management as well as weed and pest management (Mihiretu & Abebaw;
Fikadu et.al. 2019). Despite the aforementioned importance and area coverage, teff
productivity is much less at national, regional and local levels due to factors like lack
of high yielding cultivars, poor management practices and low input utilization (FAO,
2016). Moreover, the erratic and uneven distribution of rainfall is becoming a threat to
produce late maturing local teff varieties due to frequent moisture stress at flowering
and grain filling stages thus leading to either lower yield or total crop failure
(Setotaw, 2011). Study by Crymes (2015) shows 25-30 percent of teff would be lost
before and after harvest, and lodging may contribute to the yield loss up to 30 percent.
The high losses along the production processes can reduce the available quantity of
teff by up to 50 percent. The average productivity of teff in Ethiopia is 1.75 t/ha at
smallholder farmer level which is very low (CSA, 2019). However, through research
and applying improved agricultural technologies, teff yield can be raised to 5 t/ha
(Wassie, 2014).

To improve efficiency of smallholder farmers,the existing levelsof resource allocation

must be known. According to previous researches in Ethiopia, there also exists a wide
teff yield gap among the farmers that might be attributed to many factors such as
suboptimal genetic gain, low access to seeds of improved varieties, poor agronomic
practices and lodging (Bekele et al., 2019; Abraha et al., 2017).

In this regard, improving total production and productivity is not a choice for most
developing countries, but rather a priority and the first consideration in their policies.
Theoretically, there are two potential options for increasing overall production and
productivity. The first option is through improved use of inputs and/or technology
enhancement at some input stages. The other option is to develop producers'
efficiency. Efficiency measurement studies are important for countries like Ethiopia,
technologies is low (Dorosh and Rashid, 2013; Solomon Bizuayehu, 2014).
Efficiency estimation would therefore provide information on whether to continue the
existing technology by improving the Assefa et al. Determinants of Productivity and
Efficiency Teff Production efficiency of less efficient farmers or to encourage
adoption of improved technologies to increase the productivity of teff

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 1.2 Objective

To review teff production and productivity in Ethiopia.

To review economic and technical efficiency methods and approaches
To review determinants of teff productivity and efficiency in Ethiopia.

2. Teff Production in Ethiopia

Teff is one of the most important and dominant staple cereal crops in Ethiopia. Cereal
crops grown on 71% of the total area cultivated and about 61% of total agricultural
production shared though teff is untouched cereal crop; it is the second largest share
of cereal crops production following maize. Teff accounted approximately 28.4% of
the total cereal crop’s cultivated area and 50% of total cereal production quantity. Teff
production area continues to expand; and a greater number of farmers are producing
teff. Approximately 6.3 million farmers were growing teff in 2013; compared with 4.4
million farmers in 2001/2002. Similarly; the cultivated area which is allocated to teff
is increased from 1.8 million hectares in 1997 to 2.7 million hectares in 2013.

2.1 Farming Practice in Teff Production And Their Effectiveness

There are two major types of Teff farming practices in Ethiopia; such as; broadcasting
and row planting. Teff planting with broadcasting method is considered as a
traditional teff farming practice and it has a number of disadvantages like it need
much amount of seed rate; reduces the productivity computation of soil nutrients and
alike. On the other hand; Row teff planting method is expected to increase teff
productivity; requires small amount of seed rate; but; in reality; it is labor intensive
and requires mechanization issues due to the size of the seed is too small. As a result;
farmers exposed only put a relatively small part of their farm plots aside for row
sowing due to requiring additional labor and back to the traditional way (teff sowing

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with broadcasting). The issue of the viability of teff row planting under the current
agricultural technology of Ethiopia is debatable. Some studies disproved that teff row
planting is not cost effectiveness. In contrast; the cost-benefit analyses showed that
the increase in teff yield compensates the cost of the additional labor in the first year
of adoption when yields increase by 8% and more. Apart from this hard fact; suitable
mechanization for row planting of teff would change the cost-benefit picture
significantly and is shown to be an investment with possible high returns.

2.1.2 The Efficiency Of Teff Production In Ethiopia

Theoretically; there are three possible alternatives to increase teff production:

(i) Increasing the level of input use; for example; expansion in the area and increasing
the level of other external inputs. Mostly; this option is not a viable option because
resources like land are becoming limited.
(ii) Improving the efficiency of resource use. Through increasing the technical
efficiency of teff production; it is possible produce the maximum possible output from
the same level of resources using the current technology. Moreover; it also refers to
narrowing the gap between the actual yield and the potential or maximum yield.
(iii) Technological change which involves the use of new technologies such as
developing new high yielding varieties. In this case; the change raises the production
frontier to a higher level. The last two options are the most important sources of
growth in production and have been an area of great interest for both economists and
policy makers .

Technical efficiency is defined as the effectiveness with which a given set of inputs is
used to produce an output. A firm is said to be technically efficient if a firm is
producing the maximum output from the minimum quantity of inputs; such as labor;
capital; and technology. Technical efficiency requires noun employment of resources
actual output from the given inputs Technical efficiency = 100 maximum potntial
output from the given inputs × The yield potential is defined as the yield of a crop
when it is grown without any biophysical limitations other than uncontrollable
factors; such as solar radiation; air temperature; and rainfall in rain fed systems
Therefore; the yield gap is estimated by the difference between the yield potential and
average farmers’ yields.

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There are three groups of factors that affect the yield gaps in farmers’ fields .
These are:
i) Biophysical factors including varieties; inferior seed quality; weed pressure; insect
damage; diseases and other pests; soil problems; drought; flooding; nutrient
deficiencies and imbalances; and lodging
ii) Socioeconomic factors involving profit maximization; risk aversion; labor
shortage; farmers’ knowledge and skills on best practices; lack of access to credit;
etc.,
iii) Institutional factors including governments’ policies; output price; agricultural
credit and input supply; agricultural research and extension. Moreover; the major
challenges in yield gap analysis identification and gain quantification problem;
meaning that it could be hard to identify which factors that have the greatest impact
and that it gains that could be realized if these constraints are removed.

2.1.3 Determinant of Technical Efficiency

The focus of this analysis was to provide an empirical evidence of the determinant
productivity variability/ inefficiency gaps among smallholder teff farmers in the study
area. Merely having knowledge that farmers were technically inefficient might not be
useful unless the sources of the inefficiency are identified. Thus, in the second stage
of this analysis, the study investigated farm and farmer-specific attributes that had
impact on smallholders` technical efficiency.

Accordingly, the negative and significant coefficients of age of the household head,
education, improved seed, training and credit indicate that improving these factors
contribute to reducing technical inefficiency. Whereas, the positive and significant
variable such as farm size, affect the technical inefficiency positively that is increases
in the magnitude of these factors aggravate the technical inefficiency level.

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2.1.4 Specification of Econometric Model

Farrell's paper (1957) led to the development of various approaches to productivity

and efficiency analysis (Abdul-Salam and Phimister, 2017). Stochastic Frontier
Analysis (SFA) and Data Envelope Analysis (DEA) are the two popular techniques
used in literature.
According to Toma et al. (2017), highly correlated results are achieved by both
methods. The stochastic frontier technique proposed by Aigner et al. (1977) and
Meeusen and van den Broeck (1977), later updated by Jandrow et al. (1982) has the
potential to miss specify functional form, leading to biased inefficiency estimates,
which is considered to be a weakness compared to the non-parametric DEA
approaches. The DEA technique first introduced by Farell (1957) and further
improved by Charnes et al. (1978), employs a non-parametric approach to efficiency
estimation The main criticism of this approach is that it ignores the effects of
stochastic error and ascribes all deviation from the frontier to inefficiency (Kopp and
Smith 1980; Thiam et al., 2001; Murillo-Zamorano, 2004). In addition, the inability to
use the term disturbance makes it impossible to conduct statistical studies.
In Ethiopia, conventional rain-fed agricultural production dominates because of
which the sector is subject to shocks such as weather, climate change, and other
uncontrollable factors. In addition, data on farm activity is not adequately recorded
because most farmers are uneducated, leading to errors in measurement (Coelli and
Battese, 1996). Taking into account these inefficiency characteristics, this study
therefore adopted the SFA in estimating the efficiency of teff farmers in southwestern
Ethiopia since it distinguishes the deviation from the border into the two components
of inefficiency and the idiosyncratic error. The symmetric component captures the
random effects outside of the control, including statistical noises exogenous to the
farmers, particularly those based on cross-sectional household survey data. Various
functional forms have been developed to measure the physical relationship between
inputs and output. The most common functional forms are Cobb– Douglas and
transcendental logarithmic (translog) function, each having their merits and demerits.
Both models largely dominate the applications literature in Assefa et al.stochastic
frontier and econometric inefficiency estimation (Coelli et al., 2005).

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 2.1.5 Estimation Approach

Conventionally, two estimation procedures are used to estimate the inefficiency

sources of farmers: one stage estimation procedure and two stage estimation
technique. In one-stage estimation, inefficiency effects are specified as an explicit
function of certain factors unique to the firm, and all the parameters are calculated in
one-step using the maximum likelihood method. The second approach is the two stage
estimation process in which first the stochastic output function is calculated, from
which efficiency scores are extracted, then in the second stage the derived efficiency
scores are regressed on explanatory variables using ordinary least square (OLS)
method theoretically; there are three possible alternatives to increase teff production:
(iv) Increasing the level of input use; for example; expansion in the area and
increasing the level of other external inputs. Mostly; this option is not a viable option
because resources like land are becoming limited.
(v) Improving the efficiency of resource use. Through increasing the technical
efficiency of teff production; it is possible produce the maximum possible output from
the same level of resources using the current technology. Moreover; it also refers to
narrowing the gap between the actual yield and the potential or maximum yield.
(vi) Technological change which involves the use of new technologies such as
developing new high yielding varieties. In this case; the change raises the production
frontier to a higher level. The last two options are the most important sources of
growth in production and have been an area of great interest for both economists and
policy makers .
Technical efficiency is defined as the effectiveness with which a given set of inputs is
used to produce an output. A firm is said to be technically efficient if a firm is
producing the maximum output from the minimum quantity of inputs; such as labor;
capital; and technology. Technical efficiency requires noun employment of resources
actual output from the given inputs Technical efficiency = 100 maximum potntial
output from the given inputs × The yield potential is defined as the yield of a crop
when it is grown without any biophysical limitations other than uncontrollable
factors; such as solar radiation; air temperature; and rainfall in rain fed systems

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Therefore; the yield gap is estimated by the difference between the yield potential and
average farmers’ yields.
There are three groups of factors that affect the yield gaps in farmers’ fields .These
are:
ii) Biophysical factors including varieties; inferior seed quality; weed pressure; insect
damage; diseases and other pests; soil problems; drought; flooding; nutrient
deficiencies and imbalances; and lodging
ii) Socioeconomic factors involving profit maximization; risk aversion; labor
shortage; farmers’ knowledge and skills on best practices; lack of access to credit;
etc.,
iii) Institutional factors including governments’ policies; output price; agricultural
credit and input supply; agricultural research and extension. Moreover; the major
challenges in yield gap analysis identification and gain quantification problem;
meaning that it could be hard to identify which factors that have the greatest impact
and that it gains that could be realized if these constraints are removed.

2.1.6 Determinants of the Productivity of Teff In Ethiopia

There are considerable variations in the productivity of plots growing teff across
Ethiopia. The major drivers for productivity differences appear to be the levels of
input use, the management practices employed, the age of the operator, the ease of
access to markets, and the level of engagement in extension efforts. The findings lead
to a number of policy implications. First, there are high rates of return to investments
in the development of better seed varieties. Second, the payoff to investments in
extension efforts is also high. Third, targeting efforts to increase women’s access to

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teff plots will improve incomes for women. Fourth, reducing the costs of remoteness
through the construction of rural roads and increasing distribution outlets of modern
inputs is likely to have a positive impact on teff productivity. Finally, innovations that
reduce labour requirements for growing teff might satisfy the increasing demands for
teff at an affordable price.

Conclusion

The main objective of this study was to analysis productivity and efficiency of teff
production in Jimma zone of Oromia region, southwest Ethiopia. Data was collected

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from 323 teff farmers through a structured questionnaire. From the stochastic frontier
analysis, results of this study confirmed that there is considerable room to enhance
production and productivity of teff production by improving management using
existing inputs and technologies.The estimated stochastic production frontier model
indicated that seed, fertilizer and labor were significant and positive determinants of
productivity level of teff in the study area. Hence, the increase in these inputs would
increase productivity of teff the productivity of teff is still lower due to spatial
heterogeneity like climatic variability; technical inefficiency and other factors.The
main challenges for teff production are technical inefficiency because its technical
inefficiency is lower. Meaning that; there is a significant yield gap between the
expected yield approved by research field and the farmers’ actual yield of teff in the
country.

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