Application of Stochastic Frontier to Agriculture in Ethiopia

Farming is more than just a job of Ethiopia’s smallholder farmers, who live in a low productivity environment. This study employed stochastic frontier approach agricultural efficiency in Ethiopia. Furthermore, Tobit model results show that loss due to wild animals had a negative impact on technical efficiency, while slope of the land and off-farm income had a positive impact. Regarding to the determinants of allocative efficiency, uses of mobile have positive impacts and the off-/non-farm income have negative impacts. In terms of economic efficiency determinants, land slope has a positive influence, while loss due to wild animals and off-farm income have a negative influence. According to the study findings, farmers in the study area kill wild animals, such as monkeys, pigs, and apes, because the loss of wild animals has a high impact on agricultural production during the pre-harvest season. Thus to increase efficiency of farmers and boosting agricultural output, Ethiopian governments policies and strategies should be directed toward providing tourism, construction of soil bunds, tree planting, planting grass, fencing and use of natural fertilizer to maintain the fertility of steep slopes, and supporting farmers by providing network facilities for mobile users that boost farmers’ maize productive efficiency.